[Recorded by Electronic Apparatus]
Thursday, December 5, 1996
The Vice-Chairman (Mr. Thalheimer): Ladies and gentlemen, while the chair is sleeping, we'll carry on, I guess. Today we continue, under Standing Order 108(2), a study on natural resources and rural development.
We have today, from the Atlantic Canada Opportunities Agency, Peter Estey.
Are you related to Justice Estey?
Mr. Peter Estey (Vice-President, Programs and Development, Atlantic Canada Opportunities Agency): No, sir.
The Vice-Chairman (Mr. Thalheimer): From the Western Economic Diversification Office we have Maryantonett Flumian, and from the Federal Office of Regional Development - Quebec we have François Gauthier.
Ladies and gentlemen, if you'd keep your remarks to about 10 to 15 minutes, we'd appreciate that, because I'm sure the members will have a lot of questions.
The floor is yours, whoever wants to begin.
Mr. Estey: Thank you, Mr. Chairman, for the opportunity to discuss the role of the Atlantic Canada Opportunities Agency in rural economic development.
Over the next few minutes I'll give you a brief summary of ACOA's mandate, a general approach to rural economic development, a few examples of that approach and finally a bit of detail on ACOA's support for community-based economic development.
Given the limited time available, I have left with you a small package on ACOA's strategic priorities, lines of business, overall results and 62-site rural delivery network.
ACOA derives its core legislative authority from the ACOA Act, which provides ACOA a broad mandate for economic development in Atlantic Canada to enhance the growth of earned income and employment opportunities in the region. To fulfil that mandate, ACOA works in partnership with small businesses, provincial governments and economic development stakeholders throughout the region.
ACOA's performance report for the period ended 31 March 1996 was tabled in Parliament by the president of Treasury Board on 31 October. This report, which is based upon surveys and analysis by Statistics Canada and Coopers & Lybrand using Conference Board of Canada models, indicates that with its partners, ACOA has achieved some pretty remarkable results.
For example, every $1 invested by ACOA and its public and private partners generates a GDP increase of $5, and every $1 invested by ACOA in business projects yields tax revenues and employment insurance savings of $3. Between 1989 and 1993 the net employment gain for ACOA business clients exceeded that for all Atlantic Canada by 11% and for all Canadian firms by 13%. And the survival rate for ACOA-assisted firms is twice that of all firms.
Of particular interest to you today may be the fact that some 70% of the jobs the agency has helped to create have been in rural areas. This may not be surprising given the structure of the Atlantic economy, where rural-based sectors account for over 10% of employment, compared to 5% nationally, and two-thirds of Atlantic Canadian exports, by dollar values, are natural resource products. And 49% of Atlantic Canadians live in rural areas, compared to 23% nationally.
With opportunities such as new mineral, oil and gas discoveries and aquaculture, the resource-based economy will continue to be a major source of growth in Atlantic Canada.
ACOA will continue to foster such growth by: expanding markets for products, where resource availability permits, through such activities as support for external market development; improving international competitiveness of the rural-based industry through developing enhanced entrepreneurial skills and distance education initiatives; increasing investment in value-added activities and related employment, such as expanded processing, new product development and ISO 9000 certification; supporting viable opportunities to diversify the rural economy by aiding and developing new resource-based products; and reducing the seasonality of resource-based operations to increase both productivity and employment.
To provide you with a few more tangible examples of this approach, I would point out such things as food processing in Prince Edward Island, where since 1990 ACOA and the Province of P.E.I. have levered over $125 million of private investment into the potato processing industry, with a $35 million investment in waste treatment and storage and processing facilities. This has led to a 40% increase in employment, and potato acreage has increased by more than 20% to 100,000 acres.
In the softwood sawmill industry in Nova Scotia, since 1993 the EU has required that lumber products be kiln-dried, and because 25% of Nova Scotia production was exported to Europe, this could have had a serious impact on rural Nova Scotia. However, with ACOA financial support, the industry has been able to acquire kiln-drying capacity and thus maintain its export markets and about 500 jobs in rural areas where there are few other employment alternatives.
As well, ACOA and the Province of New Brunswick have designed and are implementing a growth strategy for salmon aquaculture in New Brunswick. Several million dollars of government support have gone to stimulate balanced growth for all major inputs: processors, feed producers, hatcheries and R and D transfer facilities. This has enabled the industry to grow from one producer in the early 1980s to over 70 sites, with current sales in excess of $100 million annually and over2,400 jobs.
For tourism throughout Atlantic Canada, the agency helps build strategic partners among industry associations while emphasizing a coordinated regional approach to international marketing and research and training for more efficient use of the industry's resources. The coordinated 1995 marketing campaign produced $31 million in tourism expenditures and a return on investment of over 10 to 1.
But these are only examples. A vibrant and sustainable rural economy must be based on practical and workable program design at the local community level. Community-based economic development is an integral part of ACOA's strategy for the Atlantic region. It is a bottom-up, collective action by communities to improve their economic health with a focus on wealth generation, job creation and enhanced viability for the community and the region.
ACOA's role in community-based economic development, or CBED, is to provide professional and technical support to such organizations, coordinate the activity of such organizations and provincial and federal agencies, partner with communities in the design of programs and services to businesses, advocate community economic development priorities with federal departments to help ensure that federal policies are adapted to local needs, and provide financial assistance for local organizations and economic development projects.
ACOA's goal in this area is to strengthen the capacity of community organizations to plan and implement their own local economic priorities. We are building upon existing partnerships with provinces and communities to develop a broadly based effective economic development infrastructure.
One example of this approach is in Newfoundland where, working with the province through a federal-provincial community task force, more than 60 rural development groups have been consolidated into 19 regional boards with the resources to take effective charge of development for their region.
The 40 community business development corporations are an important part of Atlantic Canada's community-based infrastructure. These were transferred to ACOA in 1995 with the Community Futures program. The community business development corporations provide financial and counselling assistance to small and medium-sized enterprises in rural areas and, generally with a relatively low cost, have become a very effective mechanism for job creation.
This year in Atlantic Canada the community business development corporations are facing loan demands in excess of funds available of close to $4 million. But ACOA is going to provide this funding as a top-up to the annual Community Futures allotment of $9 million as an investment in job creation in rural areas.
The agency believes it is important for all rural communities to have access to the small business lending and counselling activities of the CBDCs. Thus, their coverage is currently being expanded to all rural areas in Atlantic Canada. By the end of fiscal year 1996-97, an additional 400,000 Atlantic Canadians will have access to these services. ACOA is providing $2.3 million this year for lending to small and medium-sized enterprises in the new rural areas to be covered by CBDC activity.
ACOA's rural involvement is part of a bigger picture of economic development across the entire region. The agency's approach is guided by the strategic priorities of entrepreneurship development, access to capital and information, trade, innovation and technology, business management practices and tourism development. In each of these areas ACOA works through clear, structured programs and as a member of the industry portfolio to stimulate new business opportunities.
It forges links and partnerships designed to transfer and develop innovative and commercially viable technology. It encourages the growth and implementation of state-of-the-art management practices and invests in the development of strategically promising economic sectors.
Given the structure of the Atlantic economy, rural economic development is integrally tied to regional economic development. An ACOA commitment is to provide the small towns and villages where so many of the region's businesses, entrepreneurs, innovators and future movers and shakers reside with the basic tools they need to prosper.
The Chairman: Thank you very much.
We'll now hear from the witnesses from the Western Economic Diversification Office.
Ms Maryantonett Flumian (Senior Assistant Deputy Minister, Department of Western Economic Diversification): Thank you, Mr. Chair.
We have distributed a short deck. I will quickly walk you through some of the points that need elaboration.
Beginning on page 2 of the deck, I think the committee is well aware that the west is an economy primarily based on resources like oil, lumber and wheat. Agricultural output is larger in the west than it is in the rest of Canada as a whole. Resource industries such as petroleum and forestry have a higher presence in the west than they do in other parts of the country.
As you can see on page 3, the west relies heavily on the exports of these primary commodities. Agriculture, forestry and energy accounted for 74% of exports from the west but for only 33% of exports from Canada as a whole.
I'm moving along to page 4 of the deck. It's also clear to say another trend is at work here. Economical rationalization in agriculture, forestry, and the mining industry means there have been fewer jobs in rural areas in the last few years.
In the 1980s, for areas heavily dependent on grain exports, high interest rates, drought, and record low prices forced many farms and associated small businesses to sell out or to go into bankruptcy. Today issues at play such as the privatization of railways, the abandonment of rail lines and roads, the elimination of the Western Grain Transportation Act, and the reduction of international trade barriers under the GATT, the FTA, and NAFTA are creating a new environment, bringing new opportunities and some uncertainties. Changing business practices and newer technologies are resulting in a more competitive and efficient business environment, but the cost of this has sometimes been in the creation of fewer jobs. As a result, non-agricultural single-industry towns are struggling to cope with job losses because of some of this rationalization that has occurred in the natural resource industries.
Our focus at Western Diversification is to promote the development and diversification of western Canada by building on existing industry strength and by pursuing those opportunities in related value-added and emerging industries. Maintaining the strength of the resource-based economy depends increasingly on the development of value-added products, the enhancement of productivity through technological innovation, and helping communities to adjust through the changing economic realities I described earlier.
A real change came to us at Western Diversification with the 1995 budget. It challenged us to find new ways to provide quality services with far less money. That budget reported an 87% budget cut to our grants and contributions budget as a result of the first program review. Therefore as direct loans we were making with individual businesses ceased we sought to form partnerships with banks to create investment funds. At the time we were also, like ACOA, given responsibility for Community Futures development corporations and the Canada business service centres in western Canada so we could make efforts to develop linkages in order to provide a single point of contact for federal services to small and medium-sized enterprises.
I'll say a few words about the growing importance of small business in our economy. I think it's a truism now that the primary engines of economic growth in western Canada, as elsewhere, have been small and medium-sized businesses. SMEs account for nearly all net job creation in recent years, and the small businesses in the west greatly out number the medium- and large-sized businesses. For example, 95% of firms in the west have fewer than fifty employees, and these small firms account for 39% of the jobs in the west.
On how we have tried to organize our business lines for clients' needs, we've identified several as a result of research and consultations with many of the small businesses we try to serve in western Canada. The research and the consultations have identified areas in which small businesses experience particular difficulty.
One is in the whole area of access to critical information: where the market opportunities are, what sorts of technologies are available. A second is this whole area of access to capital, and that's especially for firms with limited fixed assets. The third area of importance is the whole issue of access to market, including not just access via free trade but logistical support and some of the knowledge barriers that impede individuals and their firms from knowing what markets are available and how to access them.
A fourth area would be the entire business climate, which encourages investment innovation. On that front we try to do work as is required, for example advocating in the area of regulatory reform.
Finally, we try to work with small businesses and communities in developing and maintaining some of the management and technical skills required in this kind of environment. Ensuring access to capital and providing some of these services which address the needs that are critical for the success of SMEs is something we try to do in both urban and rural areas.
How do we do this? On page 9 of the deck we begin to address some of these issues.
Since July 1995 we've been working to enhance access to government programs through the use of this concept of a single window in order to streamline and improve the delivery of these services to SMEs in western Canada and in the communities. The single-window approach means that a number of complementary services of several government departments and agencies is provided at the client's point of contact, whether it's the Community Futures development corporation or a Canada business service centre.
Our goal is to ensure that clients can receive enhanced access to services, even of other organizations when required, at the same point they make contact, without the stereotypical bureaucratic run-around.
For example, the one-stop business registration pilot project we were running in British Columbia with the British Columbia government enables a business client to complete electronically registration forms for the four most commonly used agencies - the B.C. Registrar of Companies; Consumer Taxation; Workers' Compensation; and Revenue Canada - all at one location.
In terms of how we specifically address our rural service strategy, let me say a few words about our rural delivery network, the tools and resources to help rural residents adjust and develop their communities, and the kinds of partnerships we have formed. If you turn to page 11 of the deck, you have displayed before you the 90 points of service in urban and rural and remote communities across western Canada. This network is composed of 78 Community Futures development corporations,4 Canada business service centres, 4 women's enterprise centres, and 4 of the original WD offices.
All have programs and services designed to meet the needs of small and medium-sized businesses, the need for information for financing and for help in areas such as accessing new markets. Our approach to rural economic development has been to utilize the knowledge and expertise of all of those agencies that deliver services directly to rural clientele.
As a few words about Community Futures development corporations, expanding on what you find on page 12 of your deck, the main elements of our rural delivery system is this network of78 Community Futures development corporations. Over the past year, CFDCs, as we call them for short, have responded to over 81,000 requests for information. They've made more than $37 million in repayable loans to over 1,600 clients, and they have helped create over 7,500 jobs. On average, each western CFDC extended 24 loans for a total value of $527,000. The average value of a loan is $22,000, and the maximum they're allowed under this program is $75,000. In addition to the loans they made directly, CFDCs leveraged about another $67 million from other financial institutions in 1995-96.
Over 60% of our CFDC network includes a youth-oriented program in their business plan. Some CFDC boards even reserve a seat for a youth representative. In the last year, WD has approved a $15 million repayable investment funding for young entrepreneurs - that would be people under 25 years of age. We deliver this through what we call the western youth entrepreneur program, which is designed to help young westerners start or expand their businesses, and the loans are made through CFDCs. To date, over 100 applications have been received, some 56 loans have been approved for young entrepreneurs, and over 100 jobs have been created. The maximum loan size under this program is $10,000.
In addition, as you can imagine, Community Futures staff also provide local information services, business support services and access to loans for small clients. They act as catalysts in their communities to help them get involved in programs such as the community access program and community investment program. They also help to develop local integration activities to improve services in their communities. For example, they try to work closely with the PFRA and with other provincial government agencies and activities.
For other federal programs that are delivered through this network, many of the CFDCs also deliver the Human Resources Development Canada self-employment assistance program, and a number of them also have HRDC automated service kiosks.
Our work in these areas is to ensure that rural communities have the tools and resources necessary to develop their potential, and again, as I have been stressing, the tools are primarily information on commercial opportunities, on regulatory requirements, on trade opportunities, and on available services and programs.
In area of assisting to provide capital, we're trying to enhance the ability of rural western Canadians to access the capital they need.
Our 90 points of service that I have been speaking about are connected through information technology. Canada business service centres currently represent the core single window to information for entrepreneurs and businesses. They also provide a wealth of up-to-date commercial, regulatory and program information, which is accessible on-site for a client who wants to come in, by phone, by fax, and on the Internet. They are able to provide face-to-face service for people coming in, which is extended throughout our entire network as a result of this information technology.
These Community Futures corporations are linked electronically to each other and to our WD offices and all of our other service delivery partners. Therefore, this extends the reach and quality of service they can provide, because they can do it all from the location they're found at.
As an example of one of these centres, let me say a few words about the Tawatinaw Regional Innovation Centre located in Westlock, Alberta. It's an excellent model of what we refer to as the one-stop delivery of business services in a rural area. This is an area that serves a population of about 25,000. Some of the partners in this centre include federal government offices of the CFDC, PFRA, HRDC and the Business Development Bank. The provincial offices that are represented are Economic Development and Tourism, Alberta Agriculture and the Alberta Opportunity Company.
Computers, resource material and training are available as well as an electronic link-up between the centre and our WD office in Edmonton. Business registration services and licensing will also soon be available through this site.
Moving quickly to page 15, Mr. Chair, SMEs, particularly in rural and new economy areas, are often unable to obtain financing due to the small size of the deals, the relatively high administrative cost to lenders, and the gaps in business skills and managerial expertise. Through Western Economic Diversification, we have leveraged capital from the banks and venture capital funds to meet some of the financing gaps in these emerging sectors in priority areas such as agricultural biotechnology, environmental industry and tourism.
We have two other initiatives designed to meet the needs of small and medium-sized entrepreneurs throughout the west. CFDCs provide loans from their investment funds, as I said earlier. Just over $16 million is available for the west in the current fiscal year of 1996-97. The women's enterprise initiative is another pan-western initiative that will provide $38 million to women entrepreneurs over the next five years. Both these groups make loans on commercial terms: interest is charged and security is taken.
We have other innovative investments that are pursued by CFDCs in western Canada, and we can speak about those in greater detail if there are questions.
Moving to page 16, what we have tried to do in the capital services area in setting up our funds is to form partnerships with banks that are intended to increase the competitiveness of our small businesses. Others are designed to create new sources of capital for small and medium-sized firms. All are focusing on tapping the potential of some of these sectors that are under-served right now.
We clearly work through partnerships not only through our network that we have described, but also with other government departments. We are currently working closely with Agriculture and Agri-Food Canada to establish some sites where we will be offering services together in one-stop locations. This is very important in parts of rural western Canada.
We're also working with a number of aboriginal business organizations to see whether we can forge new partnerships that can be established to enhance services and programs for aboriginal entrepreneurs. We have examples we can offer from every province on that front.
To conclude, we share this committee's desire to increase rural western Canada's wealth generation capacity. To do so, we must embrace not only everything we've talked about, but some of the new technologies. We must be more innovative and aggressive in marketing our products to the world, and we must encourage greater investment in our youth.
By working together, we are fairly certain that we can help ensure that the local economic development priorities continue to be clearly identified and pursued through some of the mechanisms I've discussed. Through flexible programming and partnerships, working with grassroots strategies, we believe that we can work with these communities and these entrepreneurs to achieve some of their common goals. Thank you very much, Mr. Chairman.
The Chairman: Thank you very much.
I'd like to call on the Federal Office of Regional Development - Quebec.
Mr. François Gauthier (Acting Deputy Minister, Strategy and Liaison, Federal Office of Regional Development (Quebec)): Thank you, Mr. Chairman.
The Federal office of regional development is glad to have the opportunity this morning to make a presentation to the members of this committee concerning the rural dimension of its mandate in Quebec.
I believe a brochure had been distributed to you. First of all, I will attempt to very rapidly describe our regular program and then I will tell you about the rural dimension of our mandate using examples which will give you a better idea of what we do.
First of all, a brief reminder of our mission which is to promote the economic development of Quebec's regions. Our strategy is mainly focused on employment and growth and we have two major programming vectors, the first one being IDEA-SME that I will get back to later and the second being the Community Futures Program. In both cases, we're trying to build on the dynamism of SMEs, particularly those in rural locations.
According to estimates, 22% of Quebec's population lives in rural areas compared to 23% in Canada, which is just about the same. We have a network of 23 business offices across Quebec as well as 54 Community Futures Development Corporations offices.
I will try to spare you all the acronyms possible, but some will still slip into my presentation. In particular, we have the CFDCs which the Department of Human Resources Development handed over to us and which allow us to ensure our presence more concretely in rural communities.
I'll start with the IDEA-SME programming which is basically our flagship. The IDEA-SME acronym stands for: I innovation, research, development and design assistance; D market and export development assistance; E, for exports and A, for entrepreneurship and business climate development assistance.
Since the program's inception, in April 1995, which is very recent, 175 projects out of528 projects and activities in rural communities in Quebec have been identified. For our purposes, rural communities are defined as whatever is outside the regions of Montreal, Chicoutimi, Hull, Sherbrooke, Trois-Rivières and Quebec City. Essentially, it's a statistical sampling.
Those projects have generated investments of some $17.5 million to which FORD-Q has contributed $4.9 million.
On the CFDC side, to give you an idea of what can be done through our IDEA-SME program, we have developed a project and contributed $265,000, thus enabling the CFDCs, through the Student Connections program to hire 70 students which to help them in using new information technologies, particularly the Internet.
The CFDCs are thus essentially a network which encourages the communities' participation and promote the economic growth of rural SMEs through financial and technical support.
In the context of CFP, FORD-Q has contributed some $15 million during the 1995-96. I'll give you several illustrations of this program later on.
To help you follow our activities, we have distributed them in five sectors that you will find on page 5 of the English hand outs and these are access to information, access to funding, promotion of partnerships, adjustment and diversification and, finally, youth.
The first point is the most important because it is the closest to our mandate which is more specifically to give rural areas access to government information.
I'll give you a few examples. At this point, FORD-Q is developing a project called AIDER-PME. The goal is to enable regional offices to gain electronic access to specialized information related to SMEs which will allow SMEs in a rural environment to have access to databanks from different sources that our advisors will be able to access.
There is also the STRATEGIS project, taken care of by our colleagues from Industry Canada, which is one of the largest Internet sites in the country; it is an unprecedented interactive data bank providing information to business. For Internet's benefit, we should point out that there is no discrimination concerning the location of those businesses. In other words, any business in Sept-Îles has access to the same information as any other Montreal business.
Actually, to train business people who want to use STRATEGIS, 2,000 students will be hired over the next three years all across Canada under the Student Connections Program to offer STRATEGIS to SMEs who otherwise could not plug in.
I'll give you a few example. In Abitibi-Témiscamingue, FORD(Q) organized a series of seminars on the Internet to educate local entrepreneurs about using STRATEGIS.
Through the Student Connections Program, FORD(Q), together with the town of Rouyn-Noranda, created a directory of mining companies that will shortly be published on the Internet.
As for Info entrepreneurs, it is the equivalent of the business services centres that my colleagues from ACOA and the MDEO told you about. We have a major centre at Place Ville-Marie in Montreal. Once again, thanks to the Internet structure, we have requests coming from all over Quebec. For example, a company from St-Pascal in Kamouraska county, using our centre and Info entrepreneurs is taking steps to distribute the snowblowers it manufactures in Switzerland. Thanks to Info entrepreneurs, we have put this company in direct contact with our embassy in Berne.
The Canadian Technology Network, always in the area of information distribution, is a rather specialized network made up of different officials and bureaucrats both at the federal as well as the provincial level and the private sector to pool their knowledge to make it easier for SMEs to acquire, adapt, manage and market appropriate technologies. That has also helped businesses in a rural environment.
Still in the information area, of course, there is the whole network of CFDCs. This association has established an information and research marketplace for local initiatives called CIRIL. CIRIL is a forum for the exchange and pooling of knowledge and experience regarding local initiatives and allows our CFDCs to exchange ideas. Over 45 of them are connected to the network and we expect more to come. Most CFDCs will thus have access to STRATEGIS and data banks will be subject to more use.
I'll give you the example of the Tremplin industriel of Ste- Germaine de Boulé, in Abitibi-Témiscamingue. The CFDC for western Abitibi helped the municipality of Stet-Germaine de Boulé to develop a diversified economy by setting up an industrial building known as the Tremplin industriel, whose main role is to house companies in the start-up phase and facilitate, among other things, their access to the Information Highway.
Thanks to the Tremplin, Menuiserie Jalbert, a furniture manufacturer, created four permanent jobs after two years in existence, thus allowing young people to return home.
A second company, LJL Mécanique, was set up by two unemployed entrepreneurs. Over the last two years, the company has generated 40 new industrial mechanics jobs in the fields of mining and forestry. The Community Access Program (CAP), under Industry Canada with whom we are partners together with the provincial and territorial governments, intends to facilitate access to the Information Highway for rural and outlying communities. CAP already provides funding for creating new community access sites in 47 communities in Quebec. For 1997, the CFDCs have already presented over 80 projects and it is hoped that some of them will be announced in January.
In the Eastern townships, we have the community WEB site for the Coaticook area. Thanks to this initiative, the FCDC is making the Internet accessible to the community and is providing training to maximize the use of the Internet.
I'll now go to access to funding. We have the IDEA-SME that I've already told you about, as well funding financial from institutions such as the Canada Business Development Bank as well as investment funds from the Royal Bank that are in the new economy area, amongst others. I can come back to this later if you want.
There are also the already mentioned CFDC investment funds that make up a major part of our presence in the regions. We will also be creating an inter-CFDC investment fund to increase the lending capabilities of some CFDCs where demand is stronger.
For example, the Acton Vale CFDC granted some $75,000 in funding to Viandes Philipps that has been producing marinated pork products since 1991.
Thirdly, let's talk about promotion of partnerships. We have the example of the CCIP which is the Canada Community Investment Plan also administered by our colleagues from Industry Canada with whom we are partners. This is a pilot project intended to access funds in the community, whatever money is stashed away under mattresses, if you will. Two projects have been selected to receive a contribution.
For example, in the Montérégie, together with the Corporation de développement économique et industriel de Saint-Hyacinthe and the previous industrial agents, 450 manufacturers located in the Saint-Hyacinthe region having demonstrated a strong development potential, were identified. This pilot project, specifically targeting companies in the bio-technology and the bio-food sectors, is aimed at optimizing the use of research results from area laboratories. We hope there will be more projects funded under CCIP once the bugs have been ironed out.
In the area of adjustment and diversification, we have an example that is still at the concept stage. It's something called the Rural Enterprise project and it will be set up for the lowerSt. Lawrence, the Gaspé and the Magdalen Islands.
Undertaken in collaboration with six CDFCs, the regional offices of Agriculture and Agrifood Canada and the regional offices of the Union des producteurs agricoles, together with ourselves, the pilot project is intended to develop the natural and human resources of rural communities in that area of Quebec, facilitate the integration of the economic activities associated with the new economy into the rural milieu, always in the agrifood sector, more specifically by supporting innovation in the area of commercializing and marketing goods and services produced in those areas, and diversify the revenue sources of firms in rural communities.
Another example in the partnership area is the Costal Quebec project that is part of the Atlantic Groundfish Strategy. This is intended to support the economic and community development of municipalities most affected by the decline in groundfish stocks like Quebec North Shore, Gaspé and the Magdalen Islands. We hope to be able to help our communities strengthen and diversify their economic fabric and support the development of the capability of those communities to undertake and identify activities for betterment facilitation and economic promotion of local entrepreneurship. There's a 13.5 million dollar budget.
I'll skip the examples on page 15 of the English handout but I could come back to them. For example, there's the Table agrotouristique de Charlevoix which is meant to promote the agricultural specialties and tourism potential using certain good restaurants in this marvellous Charlevoix area of Quebec.
There's also the Barraute community in Abitibi-Témiscamingue where was created a small dimension softwood sawmill always in the area of adaptation and diversification.
In the same area there is the Association touristique régionale du Bas-Saint-Laurent at Rivière-du-Loup which, as you can see, has partnerships with all kinds of people like the Human Resources Development Department, the Quebec Culture and Communications Department, the Kamouraska Economic Development Society and the Quebec Transport Department, to name only a few. The Kamouraska CFDC has set up new heritage sites and attractions to maximize the economic spin-offs resulting from the increase in the number of tourists in that area.
Finally, Mr. Chairman, there is the youth component. In rural areas, we're trying to help our youth through the dissemination of strategic information, to access the Internet like other business people. We also want to help them through counselling on starting up their own businesses.
For example, in the Laurentians/Lanaudière, we developed the Achigan-Montcalm CFDC WEB site with the help of the Montcalm RCM. The site was set up with the help of students. Amongst other things, visitors to the site can obtain information on the community's socio-economic profile as well as on the services provided by the CFDC.
There are also technological development assistance centres that are not exclusively for young people. In our new economy, many of our young entrepreneurs are drawn to these sectors. For example, in the Saguenay, Centre de haute technologie Jonquière Inc. has lent support to 35 technological projects, many of which are promoted by young entrepreneurs. The same goes for the Centre d'aide au développement de l'Abitibi-Témiscamingue.
That just about wraps it up for the rural dimension of the mandate and the presence of the Federal Office of Regional Development-Quebec. Thank you.
The Chairman: Thank you very much.
We're checking on the bell right now. I think it's the half-hour bell.
Mr. Deshaies (Abitibi): I have few questions as I have a rather good working knowledge of the services offered by FORD-Q. In Quebec, FORD-Q has always managed to provide information to those seeking it and recently it has come up with a specific policy to allow businesses to better assess their export capacity.
However, I do have doubts as to the government's will to give business access to capital. You gave the example of Barraute, in Abitibi, which is nowhere near the Lower St. Lawrence where the Optibois project was given not technical aid but support to get access to funding. The Canada Business Development Bank helped the business start up but it took almost a year before financing was found and it's finally because of all kinds of arm twisting that the Canada Federal Development Bank managed to lend money through a special program.
For a lot of young entrepreneurs that is a problem. Naturally, there haven't been any further subsidies for the last two years, but FORD-Q does not provide venture capital. I personally think the government should make more of an effort to provide support. The CFDC is doing something, but generally speaking the plan is always made with business in mind. In other words, there's always the question as to whether the stakeholder will be able to repay.
Failure rates are very low because the CFDCs themselves don't run much risk nor does the Canada Business Development Bank.
So for the young people and the new entrepreneurs, the venture capital is not available and it prevents development in rural regions. Don't you think, Mr. Gauthier, that there's a difference between the programs of five or six years ago when a lot of money was often handed out in subsidies and the present programs that have to be sot-effective?
Could we perhaps imagine a program somewhere in between? Couldn't the government make more of an effort in the venture capital area? It might lose money, but that could encourage rural development.
Mr. Gauthier: I think that's a good description of the problem. The crossbar is often set too high to allow young people to get their own businesses going.
You also pointed out the government's new philosophy with regard to financial assistance to business. It's important to point that out. We now have the IDEA-SME program that I described and that supports SMEs with a good track record. We're trying to support them in innovation and exports.
As for venture capital, Quebec is the champion in that area. There's perhaps a problem for young people, however. There's a problem with experience in the area of management and the assistance test is really critical. There are some products I spoke about, like the Canada Community Investment Program that our colleagues from Industry Canada are trying to set up to channel regional and community savings. The community often knows very well who its entrepreneurs are and there are young people in their ranks; at least, we hope so. So I think the CCIP shows promise and hope in that area.
As for the Canada Business Development Bank, I think that is also trying to be viable. It has objectives to attain, just as we do, in budgetary terms and in terms of judicious use of public funds.
I have heard your diagnostic. There is a clear problem for youth. Actually, the government considers it to be an important problem and I dare hope that our youth will have the opportunity to get a more specific analysis of the conditions they must deal with, especially in a rural environment.
I think the fact we're having this discussion today is proof that this question should be subject to further debate. Thank you.
The Chairman: Thank you.
Mr. Ringma (Nanaimo - Cowichan): Thank you for your presentations.
I'd like to go at the philosophical side of it first. You're all aware that of course there's a difference in philosophy in asking how much good big government does. Some will make the point that programs can be better done at the local level, and the less big government we have, the better it is.
This committee has heard on the road - and I was with the committee in Abitibi-Témiscamingue; in Edmundston, New Brunswick; in Sydney, Nova Scotia; and in Labrador - a number of people saying the big programs are really not that effective. As pointed out by my colleague, if we could have more assistance on the financing at a lower level and if we could have government as a facilitator, then we'd be going in the better direction.
Other than people on the road saying this - and I detected it to be a changing philosophy, particularly in Atlantic Canada - there are other criticisms.
I have a November article from the Halifax Chronicle-Herald. To get them off your back,Mr. Estey, the criticism here was about the Conservatives when they were in. It says:
Mr. Estey: Once again, I think that's an appropriate characterization. To start with your last comment first with respect to the claims of job creation being real, sir, I would hearken back to the Auditor General's report. It said that perhaps our measurement techniques could be improved slightly but that they were, in essence, good. More recently than that, Coopers & Lybrand and Statistics Canada, one of the most reputable polling and statistical analysis organizations in the world, using Conference Board of Canada models, have in fact confirmed their overall economic impacts of ACOA activity in Atlantic Canada.
As for big bucks, with respect to overall government spending in Atlantic Canada, that which goes through the Atlantic Canada Opportunities Agency for direct use with regional economic development is less than 1% of overall government spending in Atlantic Canada. So yes, you're quite right. We are in an era of small bucks, and within the dollars that ACOA does have, the amount that goes to direct support to individual businesses is well under a third of the dollars that we have. At the higher end - the big-buck end, if you will - I think we have facilitated and are facilitating the creation of a venture capital market in Atlantic Canada through ACF Equity, but that is looking at the big end.
We are also focusing, as I think we've all said, on community-based economic development through the CBDCs, the business development organizations that are the successors to Community Futures, and those are very much low-end - $500 here or $1,000 there. As my confrère from FORD-Q has said, they are servicing niche markets where the access to capital is a particular problem. As you quite readily point out, that tends not to be at the big end of things, but rather at the small end of things. I would point out as well that with respect to government involvement, the community business development corporations have a goal to be self-sustaining at least by the year 2000, at least in Atlantic Canada.
Mr. Ringma: Thank you.
If I could maybe pick up with Western Diversification, I heard you say something rather encouraging, Ms Flumian. You were talking about single-window, one-stop business. I'm going to get back to the point that people have made to this committee that government at times acts as an inhibitor because it has so many regulations and this and that. People say they just can't move because government regulations stop them. In your example - and I would like very much to get more information on it - you said there was a one-stop business registration pilot program in British Columbia.
I would really appreciate some detail from you on that, perhaps through the clerk of the committee, because I would like to pursue it. I think it's very productive and is going in the right direction. So perhaps you could give us a few words on that as an example of what your agency has experienced in working with others, with provincial governments and with federal departments, presumably to reduce this bureaucratic encumbrance that small business in particular has.
Ms Flumian: Thank you, Mr. Ringma, and of course we'll be happy to make available to you the information on the B.C. pilot. We're hoping to roll it out across the other three western provinces over the next few months, but we'll make that available through the chair of the committee.
Since the 1995 budget, which said the regional agency should act as a single point of contact for the federal face to small businesses, we have felt very strongly that we should not only take that to heart, but go further to try to encourage as many levels of government - and possibly even non-governmental agencies - to come together in one location or at least be brought together virtually in one location. By ``virtually'', I mean through technology that will permit individuals across western Canada to come into those centres.
We have utilized the approach in urban areas, but primarily in rural areas to move into communities and to utilize the knowledge and expertise of people who are already there on the ground, who already know the businesses in those communities - what their needs are and how they function. In mentioning the philosophical approach you spoke to - which I think is reflective of the philosophical shift that we have heard in our consultations, as well - what we see is that government needs to play a role as a facilitator and as a catalyst. One of the areas we've identified from our consultations with small businesses in rural or urban western Canada is that they would like to have one location to which they can go, rather than experiencing bureaucratic run around.
So inasmuch as is possible - and I think this is true of all my colleagues sitting up here - whether it's through our Canada business service centres, where we try to make as many services from federal government departments, provincial government departments, and in some cases municipal departments, available through one location; or where there is not only the access of a library but often officers available from other government departments there to assist for maybe more specialized information, for example with Revenue Canada, we offer those kinds of services in one location. There is further information available through the Internet and, of course, by phone by contacting other offices.
That's the model we've chosen to follow. We're following it throughout our 78 Community Futures development corporations, which I think will come as an area of interest. As it says in the material we've presented for you, those 78 locations cover about 80% of the non-metropolitan population of the west. We are currently out there not only seeking to improve our one-stop centres in those 78 locations but consulting with other partners to see if we can expand our coverage to have almost 100% coverage in the west in order that we can offer this concept of one stop.
It isn't identical in every location, because the needs are different in every location. We are trying to work to a level where there will be at least a minimum number of services that anybody can count on, regardless of which office they go into. We're investing a lot in training not only our own staff, but Community Futures development corporation staff, who of course operate at arm's length from us; and Canada business service centre staff, some of whom are our own staff, some of whom are drawn from other departments, and some of whom are drawn from other levels of government. We're spending a great deal of time in training them all up to the same standard of knowledge so that they can work not only with each other but with the clients to offer information on the vast array of government services. It is our intention that when they come in, clients don't feel they're being bounced around from office to office, person to person, or location to location.
The Chairman: Thank you.
Mrs. Cowling (Dauphin - Swan River): Thank you. How many minutes do we have left,Mr. Chairman?
The Chairman: Five.
Mr. Cowling: I will attempt to be very brief.
The Community Futures development corporations have likely been, I would think, very successful right across the country. However, there are areas where they are not, and I would like to point them out to you.
I have a Community Futures development corporation right in my home town of Grandview. I think I have probably received more complaints from my constituents about that Community Futures Development Corporation than I have about anything else. I think that needs to be drawn to your attention.
I'm wondering why the criteria are different in many areas of the west with respect to the appointment of the boards and the directors. A number of those boards were appointed in 1991 but they have not turned over, they have the same people. In my view, that's causing a lot of problems for this government. I'm wondering why that hasn't changed. Are we looking at a single-window approach for those Community Futures boards and directors? What's taking place there? I think it's a wonderful program, but we have some people who are sitting around and are really appointing their own friends.
An hon. member: Right on. Good question.
Ms Flumian: This is a program we inherited about a year and a bit ago. As you say, some of the performance is spotty. I'm not going to pretend that it's identical across the 78 locations in the west, or probably across the entire country.
In order to deal with some of those issues, of course, we do have Community Futures consultants who are on our staff and who try to deal with some of those situations as they arise. We have also put into place the same three-year business planning cycle that the rest of us are on in government now in order to try to bring some sense of commonality where it's appropriate; some sense of the kind of performance that we expect, since we're doing the lion's share of the funding; and some sense of the kind of community responsiveness that we expect from those Community Futures development corporations and their boards.
We have been asked by our minister and our secretary of state to look at the whole issue of how appointments are made. We are having a close look at that now, but that work is by no means complete. We are aware that there are some issues in some communities. We try to deal with those as they arise.
Notwithstanding all of that, we are working very hard to try to make the single-window approach the backbone of our delivery system, to make those windows as responsive as possible to the communities that they serve, and to ensure that the accountability measures we expect from them will make them responsive to those communities.
Mrs. Cowling: Thank you.
The Chairman: If I could interrupt for a minute, the members are going to have to go to vote. I know I have a number of questions to ask you, so I'd like to suspend the hearing. We will resume.... I assume we have only one vote. The clerk will come with me, however, and we will adjourn if we're in there for a long time. I suspect we will be back here by 12:30 p.m., though. I'd therefore ask the witnesses to please hold on, and the members to return at about 12:30 p.m. if they're able to do so.
The meeting stands suspended for the vote. Thank you.
The Chairman: We will resume the sitting.
I have questions I would like to ask. First of all, one of the concerns expressed as we have travelled in both eastern and western Canada was the suggestion, although I must say it was not necessarily backed up with any statistics, that the regional development agencies tend to operate in the urban areas of their territory. I think in part that came from the fact that your administration of the Community Futures development corporation is a rather new part of your mandate. I suspect, and correct me if I'm wrong, if you take away that part of what you do - not that it's not important, because it is - perhaps they do have a point, that the majority of your resources are going into the urban areas you serve as opposed to the rural areas.
Perhaps you could comment on that.
Mr. Estey: I would certainly be prepared to comment on that and point out that yes, we did only get responsibility for the Community Futures program in 1995. If we discount the activity that has been generated as a result of their business, it is still the case that 70% of the jobs that have been created with the assistance of ACOA come from rural areas in Atlantic Canada. Therefore I think it is a misconception that we are focused on urban areas.
The Chairman: Your actual office is where?
Mr. Estey: The departmental headquarters for the agency is in Moncton.
The Chairman: Are there any ACOA offices other than the Community Futures development corporation offices in what we would describe as the small communities of rural Canada, or are they all in the major centres in the Maritimes or Atlantic Canada?
Mr. Estey: There is an ACOA office in each of the provincial capitals, as is required by the ACOA act, and the headquarters is legislated to be in Moncton as well. There are seventeen ACOA offices and sub-offices in total, so you'll find there is one in each provincial capital, plus the head office. The remainder are in what one would call smaller communities.
The Chairman: What's the case with FORD-Q and WED?
Ms Flumian: Mr. Chairman, in our case I think your observation would have been accurate before the 1995 budget. Since then, through the CFDCs and others, we have achieved what I think is a pretty good balance in how our resources are allocated. We are also now looking at the thought of locating some of our WED staff to some of these centres where there's a need or requirement for more specialized services.
So while we began with four offices in the west, our headquarters being in Edmonton, in urban centres, we are now reaching out to 80% of the population who are served directly through our offices, and we are looking to expand that to 100% coverage. In everything we do we're striving to seek this balance, because of the large geographic areas we try to cover in western Canada.
The Chairman: Mr. Gauthier.
Mr. Gauthier: Concerning FORD(Q), thanks to our 54 CFDCs or community futures development corporations, we are quite present in the rural environment. In fact, there's not a corner of Quebec that is not covered. Of our 13 business offices I mentioned in my presentation, some are in a rural environment like Rimouski, Sept- Îles, Alma, Val-d'Or and Drummondville. Drummondville is a semi- urban, semi-rural centre. Our headquarters are in Montreal.
The Chairman: To explore that a bit further, do you think there would be any value in, rather than organizing our regional development agencies geographically the way we do it, with one in the west, one in Quebec, one in Atlantic Canada - and in fact there's one in northern Ontario, and they provided testimony to us when we were travelling in Ontario, as opposed to coming here - to have a regional development agency for rural Canada which would go from coast to coast to coast and would deal specifically with the issues of rural Canada? What are your thoughts about that?
Ms Flumian: Mr. Chairman, I guess that's a major policy issue that is better addressed by our political masters. However, within the current confines of how we're asked to work, which is within the confines of the Industry portfolio, I think the thrust of serving rural Canada, whether it be in the west, in the Atlantic, in northern Ontario, or in Quebec, is an area where certainly we in the west - but I think it's true of my colleagues as well - have made tremendous strides over the course of the last year and a half, since we were asked actually to take this on consciously through the Community Futures network.
Mr. Gauthier: Mr. Chairman, my colleague from WEDO is absolutely right. I think it's a question of political direction that we should address to our political masters. However, I would say that the Organization for Economic Co-operation and Development, the OECD, during its review of Canada's regional policy two years ago, mentioned the genius of the Canadian approach, which consists in adapting instruments to the reality of each of the regions.
Mr. Ringma asked us before how we supported the regions. I would say that the approach is different and allows us to show far more sensitivity to regional differences. One of the characteristics of the Canadian approach lies in the way we support the stakeholders. That is the comment I can make on your question.
The Chairman: You talked about the importance of the need for a telecommunications infrastructure. Are your agencies in a position to invest dollars in providing that infrastructure?
Ms Flumian: Mr. Chairman, if I may, when I said earlier that there's a balance in our resources allocation that takes into account our non-urban areas, this was specifically one of the areas I had in mind. We are investing heavily in bringing ourselves from the way we used to be, the old WD, up to the standards of the day, and we are helping through dollars and through assistance.
For example, we're hiring students over the course of the summer who will actually go out to many of our non-urban areas and CFDCs. They will assist with training in how to employ the latest technology we are helping to put into those locations, such as how to use the Internet, how to use Strategis to advantage - for people who aren't used to working with those kinds of instruments - and how to connect to other databases, the federal government's or others. We are investing heavily and will continue to do so probably over the course of the next year in -
The Chairman: I probably didn't explain my question clearly enough. I understand that you're doing all those great things, but unfortunately, if you don't have the plug in the wall or the hook into the Bell line or the telecommunications line, you can train somebody on Strategis till you're blue in the face. If they can't hook into the Internet, they can't use Strategis. Hard infrastructure is required in rural Canada, not just the training or the software.
My question is a very specific one for all three agencies. Do you have funding that you can provide, either to the private sector or to communities, to actually assist them in getting the hard telecommunications infrastructure in place?
Mr. Gauthier: I know that Bell Canada, in certain Quebec regions, has a major investment project to install the necessary cabling, especially for access to the Internet.
As for direct assistance by FORD(Q), to my knowledge, the answer is no, but this should perhaps be checked out within the context of the infrastructure program. I'm making a note of your question, Mr. Chairman. Perhaps I'll be able to check this with the national infrastructure program with which we are a partner. Maybe there are projects in that sector.
The Chairman: ACOA and WD, do you have any dollars with respect to that?
Ms Flumian: The same is true of us. We don't make direct assistance available for those purposes except for the wiring and the assistance of our network.
I am aware of some infrastructure projects in western Canada managed through our department where federal, provincial and municipal governments have made the choice of investing some of that money in building some of that kind of infrastructure.
The Chairman: Mr. Estey.
Mr. Estey: No, with respect to providing direct support to telecommunications organizations, that is not the case. Naturally enough, as you quite rightly point out, we should be partnering with organizations like that - and we do in fact partner with them - and ensuring that the regionalization plan, for example, for a Canada business service centre, which sees it going out and partnering up with a community access program in 120 communities throughout New Brunswick, for example, isn't useless, and it is if you don't have the telecommunications backbone to support it.
So you're quite right.
The Chairman: So I would be correct in assuming that all of you, leaving aside the scarcity of dollars, believe it is an important part of rural development?
Is that a yes from everyone?
Ms Flumian: Yes.
Mr. Estey: Yes.
Mr. Gauthier: Yes.
The Chairman: Okay, good.
You talked about developing international markets for rural Canadian businesses. You all have various types of programs - as do Industry Canada and some other federal departments - to try to encourage that. I'm interested in knowing whether you've evaluated your success at doing that. Can you tell me about, for instance, the 1995 or 1996 figures? You probably don't have 1996 figures now; you might have fiscal 1996 figures. How many firms that operated in the rural areas of your jurisdiction did you actually help acquire foreign markets?
Ms Flumian: Mr. Chairman, I'll go first.
I don't have that detailed information available with me today, but I will make it available to you as soon as we're back in the office.
The Chairman: Thank you.
Mr. Gauthier: The same goes for us, Mr. Chairman.
The Chairman: Thank you.
Mr. Estey: I think I'll have to get the breakdown of the rural-urban increased markets as well.
The Chairman: Okay. I understand that you do it as a priority, but it would be interesting to see exactly how effectively you're operating and how we've done on that.
Turning to access to capital - WD for sure, as well as FORD-Q, I think, although I'm not absolutely positive, while ACOA hasn't - you're switching from direct assistance to levering money through agreements with private banks or, in some cases, with the Business Development Bank of Canada. I'm interested in knowing what you're doing to evaluate the success or lack of success of that strategy.
WD has a tourism loan fund with, I assume, the Business Development Bank of Canada?
Ms Flumian: That's correct.
The Chairman: There's leverage of five to one, which essentially means - correct me if I'm wrong - that for every $5 they lend, you put a dollar aside in a loan loss pool. Is that basically what you're doing?
Ms Flumian: Basically.
The Chairman: Okay. It's probably a great simplification.
Ms Flumian: Yes, but that's okay.
The Chairman: How many loans have been made through that fund? How many firms are involved? How many dollars are involved? Most important, how can you ensure that there's incrementality? In other words, the Business Development Bank of Canada would have been providing those loans even if they didn't have WD's guarantee or a loan loss pool.
Ms Flumian: Mr. Chairman, I'll try to take those questions one at a time. If I forget any, I'm sure you'll recall them for me at the end.
Your first question was on evaluation, incrementality and all of those associated issues. As we've gone about setting up these funds - some of them are still very new, only a few months old, with eight of them out and about - we have been developing evaluation criteria. These are new at trying to capture, as much as possible, the changes that might be needed to make them more effective or identify gaps we weren't aware of at the time we were setting them up.
The oldest fund has only been in operation for just over a year. So on some of these, the evaluations would not have kicked in yet, although we're keeping a close eye on them to ensure that we can make changes as required as we go.
One of your other points concerned the number of loans that have been made under them, for example. To date, from my information as of the end of October - we have more information that we'll be happy to make available to you - we had 62 approvals under our funds, for a total of about $15 million loaned out. This is money put out by the banks. There has been no call on any of our money yet, because our money only gets called at the point at which there might be a loss.
At of the end of October, there were another 225 applications in the system that were being processed. This is more activity than we saw in the first year of the western diversification program, I might add, where the money was being given out as a loan for repayable purposes, but without any interest being charged.
In terms of your point on incrementality, these loan funds are available at prime plus 3% to 6%. So you'll find very quickly that in trying to move higher up the risk curve, there is a premium to be paid. If these individuals can, in any fashion, get funding from other quarters, that's where they're getting their funding from.
In addition to the $15 million that has been loaned out to date, since we are getting this information now, we are also putting in tracking mechanisms to follow this very carefully. We are told that an additional $12 million or so in loans has been made by banks or by the two crown corporations that we operate, the Farm Credit Corporation and the BDBC, to clients who have come in. As a result of the work we have been able to do with them, and their business planning process and all of the material that has to be filled out in advance of actually making it to the bank, about $12 million worth of activity has moved to regular loan programs that would be made under regular activity from the banks, just as a result of the assistance.
Since the importance of our loan funds is not only to increase access to capital to the particular loan funds but also, in general, to create the environment in which these clients are better prepared when they go to see the banks, we would say both of those are indicators in the fact that the banks have made $15 million in loans directly through the funds and potentially another $12 million as a result of our direct investment with the client at the front end, to help those business plan preparations.
I think one of your other questions was specifically on the tourism loan fund. That's a fairly recent fund, and as of October 30 there had not been any loans made yet, but twelve were currently in discussion with the BDC. I may have more recent information, which I will forward to you, but to date that's the information I have.
The Chairman: For a point of information, when the BDC or a chartered bank makes a loan using your loan loss pool, does the letter of commitment clearly state that it's being made because of WD's intervention?
Ms Flumian: Yes.
The Chairman: It does? Okay.
Ms Flumian: Yes, these are joint efforts on our behalf, and all of the material that goes out clearly states so.
The Chairman: I have one last question. Then I think Mr. Reed has a question as well, and Mr. Ringma has another question.
On the issue of community economic development, as we've travelled through the country there has been almost a consistent message that it's best done from the ground up, and I think Mr. Ringma alluded to that in his first question. Do you provide financial or other types of assistance to communities to allow them to establish the structures they need to pursue rural development? If you do, that's good; if you don't, why don't you?
Maybe we can get all three. Maybe Mr. Estey can start.
Mr. Estey: We do it through two vehicles. One is, of course, the community business development corporations, and the second is through what one would call regional development authorities, I guess. And the bulk of that goes through cooperation agreements we have with the provinces, so that in Newfoundland, for example, in my presentation I referred to the 19 zonal authorities, and yes, through cooperation agreements we do provide assistance to help regions start their own plans of that nature.
The Chairman: Do you have a dollar figure for that?
Mr. Gauthier: On the Federal Office of Regional Development's side, the Community Futures Development Corporations support their communities in their projects and are often part of the regional concertation structures which, as you probably know, are very well developed in Quebec. So we are partners through the CFDCs.
I'm also thinking about the coastal Quebec initiative. Although it's a recent program, there could be proposals to support the community for a specific approach. So, in Quebec, there are instruments and a structure already in place which allow the regions fuller consultation. We participate in that through our CFDCs.
The Chairman: Mr. Gauthier, do you have a dollar figure for that?
Mr. Gauthier: There are no specific figures because the CFDCs are located all over the territory. For coastal Quebec, I have figures but I didn't give them to you during my presentation. However, I can talk to you in terms of very specific projects or structures because I think your question was to find out whether we helped to set up the concertation structures. I could check that if you want.
The Chairman: Ms Flumian.
Ms Flumian: Our answer is like many of the ones you've heard. Our primary vehicle for doing much of this work is through the Community Futures corporations. This year we will put about$18 million into the infrastructure to keep them going. In addition to that, there are the loan funds we've put in for youth, for example, and that's about $15 million in this past year. Then also we are beginning to fund specific items we call strategic initiatives, where a community or a region can identify specific needs they may have.
For example, in southwestern Saskatchewan, working with the CFDC but also with other interested parties, we are establishing an Internet web site that will allow them to advertise more broadly all the local tourist attractions and the opportunities that can be found in that particular area for encouraging further development.
As communities are coming forward, we're holding discussions with them, but since this is kind of a new area for us to be investigating, I don't have a lot of other examples off the top of my head. We'll be happy to get back to the committee with more information.
The Chairman: Yes, please do.
Mr. Reed (Halton - Peel): Thank you very much, Mr. Chairman.
I think most of the important questions have been asked, and we have also shared with you the message we've received going across Canada about the idea that gradually government has to become a facilitator rather than a program deliverer, and the importance of communications. I know we're bearing witness to this explosion of the Internet right at the moment, and it's becoming a more important tool as time goes on.
I'll just ask one question, and each of you can answer. Is there a Canadian flag prominently displayed in each of your offices?
Mr. Estey: I'll start. Yes.
Ms Flumian: Yes, there's a Canadian flag prominently displayed in each of our offices, and there are signage provisions that are associated with all the contractual arrangements we enter into with the rest of the members of our network.
Mr. Gauthier: It's the same thing for the Federal Office of Regional Development and in the case of each of our CFDCs also.
Mr. Reed: Merci.
Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Reed.
Mr. Ringma: Thank you, Mr. Chairman.
I think I'll have a little look on the part of all three of you, if we can, at research and development.
I notice, starting with ACOA, you listed amongst your strategic priorities that innovation and technology is a major ingredient, and I quite agree. But you state at the same time that R and D expenditures in Atlantic Canada lag.
What can be done about it? Where are the areas you think, particularly with regard to rural development and to natural resources, were emphasized? Where do you think you can go, and what are your strategies to increase R and D?
Mr. Estey: One of the principal issues, I think, is not the R and D itself, sir, but rather the commercialization of the R and D as far as economic development is concerned.
Among the things ACOA has done in the last little while, as a matter of fact just some 10 days ago, was hold what was called an Atlantic technology forum in Halifax, which brought together members of the research communities, firms that are doing research in Atlantic Canada, and probably about 55% of those there were from the private sector.
The challenge of the 125 or so people who were brought together - and there has never been a forum like this - was the potential for doing R and D with the potential for commercializing that R and D. The challenge to those 130 or 140 people that we, ACOA, in partnership with the National Research Council, brought together was in fact to put together some very specific recommendations with respect to research and development as an economic development driver.
It is interesting to note one of the observations that the committee has made before, and you and Mr. Reed, with respect to government as a facilitator. The message came through loud and clear here that because the diverse interests in this commercialization of technology, the R and D, are in fact so broad, there is a requirement for some sort of horizontal look at it, and that probably won't happen unless there is some sort of facilitation role played by the government.
Specifically ACOA's intent is to take the 60 or so very specific recommendations we were to glean from that forum and put it together as a road map to facilitate the various interest groups and stakeholders and partners in pursuing the commercialization of technology in Atlantic Canada.
Mr. Ringma: I'll just throw in a quick suggestion. I like your description of it: a horizontal, flat look at it. I think there is a role you can play in getting together with all of the organizations out there in rural...wherever it is, Nova Scotia, Newfoundland or wherever. A lot of them out there have good ideas. They have innovation right at their fingertips. They're ready, but they don't know how to go about making a path. So there's a real role to play.
Even if you were to take the list of witnesses this committee had in Atlantic Canada and make contact with them, I think they would respond and say that they have some ideas.
How about Western Diversification?
Ms Flumian: As you're probably aware, Mr. Ringma, in the past we used to invest, along with other departments and levels of government, in projects that could be directly spoken of as research and development. The kinds of projects I refer to from our past are activities like investment in the Westaim Corporation, activities and investments like TR Labs, which operates across three provinces in the west and is looking to make inroads into B.C. In B.C., of course, there were activities like TRIUMF.
Much of the work that we do is also of an advocacy nature, making sure that we understand exactly what's going on across the country so that we can help them either advocate western interests or move to the area of technology transfer. Through the federal government's science and technology review, we've worked closely with Industry Canada, the National Research Council, NSERC and all the other science-based departments. We're extremely well plugged into research in the university community in western Canada to know what's going on, and how we might identify what's going on there and make it of use to some of our specific clients.
In one of those areas, for example, we have begun work over the last few months in the area of nutriceuticals and seeing what breakthroughs can be made in an area where, for food and the agricultural sector, the future is promising great things if we can bring about some transfers in those kinds of areas.
We have also over the last year and a half or so engaged in a cluster analysis of the potential for growth in western Canada, including the rural areas, given the importance of the resource base. We are trying to create some of those investment funds we are talking about around the areas of excellence that already exist in the west - for example, Innovation Place in Saskatoon and its predominance on a world scale in the agricultural biotechnology sector.
We're also working with some of those projects I referred to earlier like the whole TRIUMF facility, for example, to increase the awareness of the supplier base in western Canada and to increase supplier development. That way, we can transfer some of that technology to some of the western producers and manufacturers and supply some of those facilities in the west that are actually engaged in the forefront of some of these technological areas. That's the kind of activity we're involved in.
Mr. Ringma: Thank you.
Mr. Gauthier, I was very impressed by your presentation when you mentioned that you did a lot of work on the communications networks of all those communities. I suppose that increases your chances of improving the research and development they are looking for in those regions and perhaps that's why you're pushing along in that direction.
Mr. Gauthier: Yes, you're quite right. First of all, I'll mention the presence of certain federal laboratories in rural communities that are of some importance. For example, there is the Maurice-Lamontagne Institute in Saint-Flavien, in the Lower St. Lawrence area that translates into an extremely important federal presence in a sector that is important both for the region and the country.
Secondly, I agree with what Peter said to the effect that what's important for us is to put our money on marketing. There are a lot of good ideas, but they have to be controlled better to be able to access certain markets. When we prepared this presentation, we asked all our regional offices to give us examples of activities in rural communities and it so happens that many examples that were submitted had to do with marketing products. For example, the Centre de haute technologie de Jonquière or the Centre d'aide au développement d'Abitibi-Témiscamingue are certainly marketing operations, but they also tie in with the region's role, whether in mine development in Abitibi-Témiscamingue or even forestry.
Thirdly, there is the networking aspect. We want to give our businesses access to all the crucial information in the area of research and development. For example, there is the Canadian technology network where we're trying to gather all the movers and shakers of the community, like the cegeps which are the equivalent of technical colleges in the rest of the country and which are in communication with the CNRC network. So they're very powerful chains in that network which means that the business in rural community can immediately start making comparisons and gain access to the competitors' information but also to federal and worldwide research centres.
I think it's a sector full of promise for the future and regional development, the new economy and the marketing of new products. We at BFDR(Q) are counting a lot on that.
The Chairman: Mrs. Cowling, do you have a question?
Mrs. Cowling: Yes, I do, Mr. Chairman.
I want to raise a question with respect to the women's enterprise centres. One of the things we have heard at this committee with entrepreneurship in small businesses and cottage industries is that a lot of those are created by women in rural areas. When we take a look at the women's enterprise centres, we have a women's enterprise centre in Winnipeg, I believe, with satellite offices established in Brandon, The Pas, and Thompson, and we have a centre in Saskatchewan and satellite offices throughout.
I wonder why those offices are not centred in rural parts of Canada, because in my view Brandon and The Pas are not rural.
Ms Flumian: Madam, as you know, these are arm's length organizations, where the boards made their own decisions about the best places to locate.
I have to say they're slightly different in each province. For example, in the case of British Columbia they have chosen not to go the urban route. They have chosen to go the non-metropolitan route and become a centre that reaches out as widely as possible through the use of technology.
In Alberta they've established themselves in four regions, covering all the rural areas of the province and relying heavily on the technology, the telephones and so on to make themselves available.
In Manitoba, where the first women's enterprise centre was set up, their goal at that time was to be located close to our own WD office, so they selected Winnipeg, and they have now branched out into Brandon, The Pas and Thompson. I must say, though, the services they are making available will also be available and in some cases already are available through some of the Community Futures corporations, which have a more rural base.
So the model we've chosen to adopt is not one where we try to replicate every single thing in every community. We try to make all the best of those things work together through the existing networks to save dollars and optimize the locations currently in place.
Our plan is to maybe expand some of these but also to offer the services they offer in the areas where they currently are through the entire network of the services we have. So someone living in another location in Manitoba that's not directly serviced by a women's enterprise centre can feel comfortable walking into a Community Futures centre, knowing they can access everything provided by the women's enterprise centre either through one of the people who works in the Community Futures centre or by telephone or fax or some communication made possible through the technology in that particular Community Futures office, hooking it back with the women's enterprise centre.
Mrs. Cowling: I have a follow-up question. What criteria do you use for rural? What population base do you use when you talk about rural?
Ms Flumian: I think you'll see that most of the Community Futures corporations are pitched to populations of around 25,000 or fewer. As I was saying earlier, about 80% of the non-metropolitan population in western Canada can be serviced by the network we have in place.
Mrs. Cowling: Thank you.
I'm wondering if ACOA and FORD-Q could respond. What population base do you serve that you designate rural, what you call rural?
Mr. Estey: The same as Statistics Canada.
Mrs. Cowling: Okay, good.
Mr. Gauthier: In our case, we excluded the big metropolitan centres as I was explaining before in my presentation.
We've excluded Montreal, Chicoutimi, Hull, Sherbrooke, Trois-Rivières and Quebec from the calculations, so it's basically non-urban areas in our case.
Mrs. Cowling: Thank you.
The Chairman: Thank you very much.
I appreciate the patience of the staff, the witnesses and the members, because we were interrupted and we've gone to 1:25 p.m. I'm going to adjourn in just a minute, but I have one final question or comment.
This committee is very concerned about rural issues, obviously, and rural Canada. That is the reason you're here today. I assume you all do a yearly business plan for your organizations, and I'm interested in two things. One, if I looked at that business plan - and I have no idea whether that's a public document or not - would I see a section entitled ``Rural''? And two, have you received directives from the minister to emphasize rural Canada?
I'd like you each to answer those two very straightforward questions.
Mr. Estey: If you go to the ACOA business plan, you will see the words ``community-based economic development'', which is not rural in the way you've posed the question, but it is in fact the name that goes with our knowing we have to reach all Atlantic Canadians, both in urban and in rural centres. So yes, it is specifically there. And given that our reports to Parliament and our business plans are signed by our minister, the answer to your second question is yes.
Ms Flumian: The same would be true in our case; you would see an increasing wording to the effect of the importance of rural and remote communities in western Canada. Our network attests to that, and the fact that we're looking to expand it beyond the 80% non-metropolitan service area we serve now is a continuing emphasis in that direction.
With reference to how important this is and whether or not we'll continue to do it, as you're aware, Mr. Chairman, in the last throne speech the government did manage to have a few lines about the importance of looking at rural and remote issues as a matter of government policy. I think all of us sitting here are members of a working group brought together under the auspices of Mr. Goodale, who is the government minister given responsibility for this, to continue to work to enhance our presence in those rural and remote areas and to be sensitive to the policies developed across government to ensure that the needs and interests that are different in rural and remote western Canada are taken into account.
The Chairman: Thank you.
Mr. Gauthier: Because of the mission and the mandate of the department, we must support and promote economic development in all regions of Quebec whether in an urban or a rural environment particularly through partnership with SMIs and the community in the case of the CFDCs. All this is part and parcel of our mission. I would add, to follow up on what my colleague from MDEO was saying that in the coming months, we will also make sure that our services and our products are better known in Quebec's rural communities.
The Chairman: Thank you very much.
Do you have one last comment, Mr. Estey?
Mr. Estey: Yes, if I could. I'd just like to point out again that as I said in my presentation, by the end of fiscal year 1996-97 ACOA intends to have 100% rural coverage through the CBDCs. So by the end of this fiscal year it will be 100%. And that policy is approved by our secretary of state, so again, another yes.
The Chairman: Thank you very much, and again, thank you for your patience and longevity here.
Ms Flumian: Thank you.
Mr. Estey: Thank you.
The Chairman: We stand adjourned.
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