Proceedings of the Standing Senate Committee on
National Finance

Issue 25 - Evidence - June 14, 2005


OTTAWA, Tuesday, June 14, 2005

The Standing Senate Committee on National Finance, to which was referred Bill C-9, to establish the Economic Development Agency of Canada for the Regions of Quebec, met this day at 9:42 a.m. to give consideration to the bill.

Senator Joseph A. Day (Deputy Chairman) in the chair.

[English]

The Deputy Chairman: Honourable senators, this is the thirty-fourth meeting of the Standing Senate Committee on National Finance. I remind you that the committee's field of interest is government spending, either directly through the estimates or indirectly through bills.

[Translation]

On March 21 last, Bill C-9, to Establish the Economic Development Agency of Canada for the Regions of Quebec, was referred to this committee by the Senate.

The Honourable Jacques Saada was first elected in June 1997. Minister Saada was Leader of the Government in the House of Commons and minister responsible for Democratic Reform. He was appointed Minister for the Economic Development Agency of Canada for the Regions of Quebec and minister responsible for la Francophonie in July 2004.

[English]

Joining Minister Saada today are Mr. Serge Pépin and Ms. Rita Tremblay.

Mr. Saada, permit me to introduce to you our colleagues on the Standing Senate Committee on National Finance at the present time. There will be others joining us shortly. Because of the weather, they are delayed in getting here. However, I think it is important that we begin with this important piece of legislation, Mr. Saada.

My name is Joseph Day. I am a senator from New Brunswick. I am Deputy Chairman of this committee. We also have with us Senator Grant Mitchell from Alberta, Senator Pierrette Ringuette from New Brunswick, and Senator Maria Chaput from Manitoba.

Without further ado, I will ask you, Mr. Saada, to give us your opening statement. In the usual manner, if there are any questions following your presentation, we will have questions from senators at that time.

[Translation]

The Honourable Jacques Saada, Minister of the Economic Development Agency of Canada for the Regions of Quebec: It is a great pleasure to be here this morning to speak to you on Bill C-9. This legislation is extremely important for the fulfillment of the mission of the department for which I have been responsible since July 2004, the Economic Development Agency of Canada for the Regions of Quebec.

The Government of Canada's involvement in regional development in Quebec goes back a long way — back, indeed, to April 1969, to the proclamation of the Act establishing the Department of Regional Economic Expansion. This manifest interest and the different measures put in place by successive Canadian governments over the past decades are proof positive of the great importance we Canadians place on sharing wealth and on equality of opportunity for all.

That is the spirit in which Bill C-9 was drafted. The considerable debate that has taken place since the bill went to review has led to changes in line with the comments expressed by members of Parliament.

First of all, allow me to explain how this bill came into being. While it began life as a machinery bill, because it was largely technical in nature, Bill C-9 has provided us with an opportunity for a broader debate on the major issues of regional economic development. In my view — and this is the very foundation of the approach I am proposing — regional economic development is meaningless unless it is aimed at social progress and supports community initiative. This is a challenge, not for the government alone, but it is also a collective challenge, a responsibility for all.

This bill, which establishes the Economic Development Agency of Canada for the regions of Quebec — better known as Canada Economic Development, or CED — originated in the desire expressed by the Prime Minister of Canada to have distinct legislation passed that recognizes the importance of the regions of Quebec. Indeed, this desire was mentioned in the Speech from the Throne. The Agency and its functions have of course existed for a good many years, but under the aegis of the Department of Industry Act. Bill C-9 involves, first of all, according full status within our system of government to an organization that has proven its effectiveness in the development of the communities, enterprises and economy of the regions of Quebec.

Second, it means giving that organization greater visibility in Cabinet in making known the specific needs of the regions of Quebec and promoting their interests.

And third, it equips that organization with the tools it needs to harmonize the policies and initiatives of other federal departments in Quebec. I have already said this and I will say it again: we have to give the Agency the tools it needs to harmonize the policies and initiatives of other federal departments in Quebec.

It needs the tools to design an implement measures to provide more direct support for vulnerable communities.

We should add that this bill will make it possible for CED to be given the same status as that enjoyed by the country's other regional agencies, which are ACOA for the Atlantic provinces and WED for the Western Economic Diversification. Both those agencies were established through enabling legislation, under a different government. This will mean greater consistency for regional development in Canada.

This change will also mean increased accountability to Parliament, since Bill C-9 will confer upon the Agency the status of a full-fledged department with its own budget, reporting to Parliament directly rather than through the Industry Minister, with the additional obligation of presenting an evaluation report once every five years.

Bill C-9 will enable CED to consolidate its leadership and bring together a variety of federal departments and organizations, as well as other socioeconomic stakeholders involved in the development of the regions of Quebec. As a federal institution with a presence in every Quebec region, CED alone is equipped to fulfill that role.

Bill C-9 establishes the parameters by which the Government of Canada intends to contribute to Quebec's economic development. It sets out how our government plans to disseminate best practices in innovation, support key economic sectors in Quebec, promote marketing and export capabilities, build upon regional assets, support those groups and associations essential to social and economic vitality, and help communities and industries having difficulty making the economic transition to the ever-changing global markes.

Throughout the past few months, I have made a point of being open and listening to the opinions of my colleagues in the House of Commons.

I stand before you today in the same spirit of openness. I should therefore like to thank all those who are taking part in this new stage in the debate, and thus enriching it. For instance, following interventions at the committee stage, we produced a more detailed definition of our actions with respect to the social economy, particularly concerning the support to be provided for small and medium-sized businesses in that sector.

That improvement to our bill makes it possible to recognize and strengthen the ever-growing role played by the social economy in Canada, especially in Quebec communities. In Canada Economic Development, its programs and services, social economy enterprises will find partners to help them develop and contribute to revitalizing the communities in which they are rooted. I would add that I consider this amendment to be particularly important, since Quebec is one of the first provinces to promote the social economy in Canada.

Small and medium-sized enterprises are central to regional development in Quebec, and it is through them that a region's economic development takes tangible form. I should point out that, in 2002, a very high percentage of the new jobs in Quebec were created in enterprises with fewer than 100 employees.

We intend to intensify our intervention vis-à-vis enterprises so that they become even more dynamic and competitive, and even more likely to create wealth and employment in the regions. But many companies and industries in Quebec are not yet able to fit into the new dynamics of the global economy. So it is up to responsible government to support those companies by encouraging them to innovate and to be more productive.

In the course of the debates on this bill, we have provided many examples illustrating the scope of the agency's action within Quebec communities. The debate has also made it possible for us to see Canada Economic Development's contribution in terms of research and development, and its leading role with respect to innovation.

Mr. Chairman, I should now like to highlight Canada Economic Development's role in ensuring the international exposure of Quebec's enterprises and products. In this globalized environment, competition no longer comes from neighbouring regions and provinces alone. It comes from every country whose economy is open to the world today. So Quebec cannot aspire to its rightful place on the global economic stage unless it is able to innovate, target its niches and harness them fully.

How, then, can the Government of Canada help the regions of Quebec meet those challenges? As an example, let us take the Montreal region, a remarkable hub for research, development, and high technology. The Agency works closely with Enviro-Access and Bio-Quebec to promote innovation in enterprises. Canada Economic Development also coordinates its support for innovation with the National Research Council of Canada and RCC, among others, which helps enterprises with its Industrial Research Assistance Program and through the Canada Technology Network.

Allow me to give you another example. As we all know, the nanotechnology sector is headed for phenomenal development. That is why Canada Economic Development recently provided NanoQuébec with a $724,500 non-repayable contribution to help sustain the initial momentum in nanotechnology and strengthen partnerships among the various players in education, research and business. This contribution from CED will also give NanoQuébec the means to enhance emerging applied research projects and strengthen the major industrial clusters associated with nanotechnology.

Also with a view to raising Montreal's international profile, Canada Economic Development supports Montreal International's efforts to tract and encourage foreign investment and the establishment of international agencies in Greater Montreal. On April 18 of this year, to coincide with the Annual Meeting of Montreal International, we announced the renewal of two partnership agreements between Canada Economic Development and Montreal International, totaling $6.3 million over the next three years. One contribution provided under these agreements is earmarked for support for foreign investment prospecting and implementation of strategic alliances, as well as for attracting the head offices of major corporations to Greater Montreal.

We also know that Montreal hosts numerous popular, cultural and tourist events which each year draw a growing number of visitors from the rest of Canada and abroad. Cases in point are the Festival international Nuits d'Afrique, starting for the 19th year on July 6, and the Montreal International Jazz Festival. In 2004, the 25th IJF was attended by about two million people. Between 1997 and 2005, Canada Economic Development was the festival and sporting event sector's largest financial partner. The Agency contributed some $41 million for the implementation of 155 projects, in the Montreal, Quebec City and Outaouais regions as well as in La Mauricie, Abitibi and the Gaspé. The agency's actions involve support for commercialization activities on international markets to foster an increase in tourism and to generate additional income for the regions of Quebec.

Mr. Chairman, tourism is an important industry, a major economic development and sustainable development activity. Several Quebec regions receive Agency assistance to raise the profile of their tourism offering and market it abroad. For example, Tourisme Outaouais received considerable support for establishing a large-scale international marketing plan. Implementing this project could translate into the creation of some 400 new jobs in the region.

Mr. Chairman, Bill C-9 also provides encouragement for Quebec regions that are in difficulty, and vulnerable communities in Quebec. In the very wording of its mission, the Economic Development Agency of Canada for the regions of Quebec confirms the importance of supporting regions experiencing slow economic growth, as well as regions with inadequate opportunities for productive employment. That is a crucial element of the Agency's mandate. The vast majority of witnesses we heard before the Standing Committee on Industry, Natural Resources, Science and Technology shared with us their concerns with respect to those Quebec regions and communities. Over the past few years, Canada Economic Development's intervention in those regions has translated into investment that is proportionately much higher than the regions demographic weight as a percentage of Quebec's total population. The investment has contributed to supporting communities struggling with adjustment problems and to establishing strategies that give residents of those regions the means to take charge of their own development.

Mr. Chairman, I should like by way of illustration to remind the members of the Senate that the softwood lumber dispute with the United States prompted the Government of Canada to put forward different measures to support enterprises and communities in difficulty. Canada Economic Development implemented a program to come to the assistance of the regions of Quebec that were hard hit by this dispute. This program essentially targeted the economic diversification of the regions affected, along with the development of new niches. For 2003-2004, the agency approved 295 projects totalling close to $32 million. This support led to the maintenance of some 2,300 jobs and the creation of close to 1,700 others in communities hit by the lumber dispute.

And when we talk of regions in difficulty, some of them may not be in difficulty as we speak, but they are vulnerable, especially when they are single-industry regions. As we are all aware, commodity prices are not determined in Quebec or in Canada, but, on the international markets. This means that a metal which is currently performing well could tomorrow depreciate in value and, as a result, drag a region into a slump. That is why it is important not to wait for crises before intervening.

Let us take the example of Suroît. The infamous town of Huntingdon, which was splashed across the media, is situated in Suroît Sud. I believe the Suroît Sud area provides an excellent illustration of the importance of early intervention in single-industry regions. We did not wait for the announcement of textile mill closures before we began working on the economic recovery of the Huntingdon community. The Community Futures Development Corporation, SADC du Suroît, worked closely with Canada Economic Development and the local development centre CLD du Haut-Saint-Laurent on producing a diagnosis of the economic situation, so as subsequently to identify promising niches. This approach made it possible not only to make the available expertise and federal and provincial programs and services better known, but also to place them at the service of Huntingdon's workers and enterprises to ensure that community's revitalization, something which a single agency would obviously not have been able to do by itself.

Along the same lines, Mr. Chairman, the adoption of Bill C-9 will also mean that, pursuant to its mission, the agency undertakes to pursue cooperation and complementarity with the Government of Quebec and the province's communities. We will do so while respecting the agency's objective and mission. We have to work with our partners, including the Government of Quebec, in a complementary fashion; however, complementarity means complementarity, it does not mean subordination.

I should point out that cooperation between our two governments is very close. We work in very close cooperation with the Government of Quebec, and it has proven to be extremely beneficial. By way of example, allow me to speak about Chandler. We are all aware of the problems in Chandler and the Gaspé region, and we all know just how badly this region of Quebec needs support. On January 27 this year, I was in Chandler, where my colleagues from the Government of Quebec and I made a joint announcement of various measures to promote the economic diversification of the Gaspé community.

Canada Economic Development provided assistance for the drafting of a development strategy and the implementation of the promotional tools needed to attract new enterprises to Chandler or encourage existing businesses to stay and diversify.

The Government of Quebec issued an action plan for the transportation, tourist accommodation, and health and social services sectors. We worked together to ensure that the measures adopted were complementary in order to better serve the people of Chandler. Obviously, it was not a silver bullet. There still remains a lot of work to be done for this region and many others. However, it is a fine example of what we can achieve acting in our respective areas of jurisdiction with our respective programs, but while bearing in mind the importance of working together to ensure the best possible results.

In the wake of this cooperation with Quebec, the bill will enable the minister responsible for Canada economic development to conclude cooperation and sectoral agreements with the Quebec government, or with one of its agencies.

This provision in Bill C-9 fulfills in every respect the wish expressed by a number of witnesses who appeared before the Standing Committee on Industry. I am thinking in particular of Mr. Raymond Giguère, director general of the CEGEP in Rimouski. As you are probably aware, Rimouski is home to a major maritime research hub, and a synergy developed between the university, the CEGEP and the Maurice-Lamontagne institute.

This has generated a great deal of research activity around this cutting edge technology hub, which, even on an international scale, is considered to be first rate. Raymond Giguère feels that it is necessary to maintain this capacity to foster a collaborative approach with stakeholders from other orders of government.

While the approach used by Canada Economic Development promotes complementarity and a better synergy of initiatives, it also seeks to promote joint planning amongst the various levels of government and the communities movers and shakers. This approach is primarily based on the regional intervention strategies developed by the agency in each of Quebec's regions.

The agency develops these strategies for each of the Quebec regions in close cooperation with the community. It must be understood that such strategies cannot be developed in an ivory tower in the nation's capital; such strategies cannot be developed in splendid isolation in Ottawa or Quebec. Indeed, such strategies can only be developed through close collaboration with the community concerned. In other words, there is extensive collaboration with the community; these strategies are created by the community for the community. This guiding principle is a powerful component of our approach to regional economic development.

In order to facilitate this direct communication and contact with the community, we are able to count on several organizations such as the community future development corporation, to which I made reference earlier, and our business development centres. Thanks to this network, Canadian Economic Development is represented in some 60 regions and cities across Quebec. We are present at the heart of Quebec. Through the presence of the SADCs in the field, during 2003-2004, some 1,538 local and community development activities were carried out, 2,383 enterprises received technical assistance, and 1,500 investments were made in SMEs, for total loans amounting to more than $62 million.

This presence of Canadian Economic Development across Quebec was clearly illustrated by Manon Laporte when she appeared before the committee. Ms. Laporte said that in individual projects, Canada Economic Development's intervention is always complementary. The partnerships run smoothly owing to intervention in the field and from local organizations.

On the same occasion, Ms. Laporte added that the presence of the regional offices of Canada Economic Development allows for networking amongst the partners in the community. It also means that particular needs can be supported rather quickly.

I have underscored the role of CFDCs and BDCs. It is also worth noting that the Economic Development Agency of Canada for the regions of Quebec reaches out to regional communities through its 14 business offices. By working with Quebecers committed to their region's development, Canada Economic Development is able to play a vital role.

This role was already enshrined in the Constitution of 1982. Section 36.1 is very clear as to the Government of Canada's responsibility for combating regional disparities. Today, this role is once again clearly recognized in Bill C-9. I believe strongly in both this mandate and this bill.

I will conclude by saying that the adoption of Bill C-9 by the members of the Senate will mean, for Quebecers, their communities and the regions, full-fledged participation in our great project to build a fairer society and provide a higher quality of life.

My last words before handing you the floor would be that I have discovered a department previously unknown to me. As a member of Parliament, I reaped the benefit of this department, and I was a little reticent when I was offered the portfolio as my background is not in economics. However, as I said, I find the department to be inspirational, and that is because it is made up of passionate men and women. I would like to take this opportunity to pay tribute to all the public servants who work for the department and who make it the success that it is.

The Deputy Chairman: Your presentation was very clear and eloquent; I am sure that my colleagues will have questions and comments for you.

Before moving on to the question period, however, allow me to introduce you to those senators who were delayed by the rain. We have Senator Ferretti Barth, and beside her, Senator Biron and Senator Nolin, all of whom are from Quebec, and from Ontario, we have Senator Harb.

We shall now proceed with the question period.

Senator Ringuette: As we are all aware, Bill C-9 will establish the economic development agency of Canada for the regions of Quebec as a legal entity. This brings me to ask you two questions, the first of which involves a comparison with the Atlantic Canada Opportunities Agency. As a senator from New Brunswick, I have to say that on several occasions when confronted with problems, be they in the field of transport or concerning other matters, I have noticed that there seems to be a tendency to strip responsibility from the various departments in favour of placing it in the hands of ACOA, even although the agency does not have a specific mandate to that effect.

My question, then, is as follows: Will Industry Canada maintain clearly defined roles and responsibilities with regard to the new agency? We must ensure that Industry Canada does not use this new agency as a pretext for washing its hands of economic development in Quebec, as has been the case in the Atlantic region.

Mr. Saada: No, of course not. Clearly, this bill intends for Canada Economic Development to be independent from Industry Canada; however, that does not mean that there is no place for a complementary approach. Earlier, when I listed our priorities and objectives, I made reference to the importance of cooperation between the various stakeholders and departments of a given jurisdiction. It is imperative that we adopt this collaborative approach.

Furthermore, I could provide you with examples of how this could be achieved. For example, Canada Economic Development does not have a program which allows it to fund projects in the way that Industry Canada can through its Technology Partnerships Canada program; it would therefore be wise to seek out a partnership with Industry Canada. In other words, Industry Canada is able to offer support in areas such as industrial research through its programs. Canada Economic Development must therefore coordinate the various contributions that Industry Canada, Transport Canada, Canadian Heritage and other departments can offer. As my deputy minister likes to say, and I think he hits the nail on the head, Canada Economic Development is, in a certain sense, the channel through which federal services are provided.

The straightforward answer to your question is, therefore, that of course Industry Canada shall not wash its hands of Quebec. It is Industry Canada, for example, that offers a program for the textile industry; we run the program in the regions, but it remains, nevertheless, an Industry Canada program. Although Canada Economic Development is responsible for the implementation of the softwood lumber program in Quebec, it is not actually a Canadian Economic Development program.

I could provide you with a plethora of examples showing how closely we work with the various departments. This cooperation is by no means intended to weaken economic development, but, rather, to bolster it.

Senator Ringuette: I see. If the agency does indeed work as you claim, Mr. Saada, then I applaud you because, for example, jobs were lost in our communities due to the situation created by the United States in the softwood lumber dispute. Thanks to the agency, Quebec communities, like those in northern Ontario, were able to receive financial assistance. In fact, to a considerable extent, the same could be said of communities in Western Canada, which also received financial assistance. Perhaps, you will tell me that it is our own problem, but in Atlantic Canada, we only received a paltry amount of assistance.

That is why I congratulate you, minister, if you are able to have that kind of cooperation with Industry Canada, because it is very important.

My last question concerns small communities like Chandler, Tadoussac and Forrestville, which have seasonal economies. These seasonal economies are the basis for creating permanent, value-added jobs. In your presentation, you talk about social development. I must admit that I am concerned about social and economic development because nothing is being done to stabilize seasonal industries. It is well known that there are different seasons in Canada: from December to April it is impossible to work in the forest, and in August and September there are forest fires because things are so dry and no one can work in forest-related industries. What can we do for these small communities to create regionally-based value-added jobs and not have them go to Montreal, Sherbrooke or Toronto? How can we ensure that processing takes place locally, so that there are some ongoing benefits and year-long permanent jobs created in these small communities?

Mr. Saada: You have touched on an extremely important point. If we allow economies to shift to major centres, young people automatically move away from their communities. When the young people leave, a region cannot survive. If we want to look at the long term, it is important to support regional economic activity that holds promise for young people. There is no one answer that will work for all regions. There are as many solutions as there are regions. In fact, there are a variety of solutions for different sub-regions.

Concretely, there are two or three facets to this. The first, when I talked about regional intervention strategies, is that we have targeted sectors that were promising for individual regions, in terms of resources, training centres, etc. As I said earlier, that was done in cooperation with local communities. It was not imposed out of the blue by the government from Ottawa or Montreal. There is obviously massive investment in this sector and we are talking about economic diversification. Regions that are geared to seasonal activities have no choice: they have to live with that reality. What can be done to create more ongoing economic activity year round?

The first thing is economic diversification, which involves investing massively on the basis of the resources and opportunities available in the region. Second, in 13 of the 14 regions, if not in all 14, tourism is one of the three or four sectors selected. If summer tourism is working well, winter tourism will develop as well. There is no linkup between the two.

For example, there was an outfitter in Quebec that only took people fishing. The season lasted from May until September; by October it was all over, and nothing more happened.

Outfitters can develop winter activities as well and attract foreign tourists in the winter. Doing so would extend the working season. That is a very small example that illustrates the situation well. The idea is to diversify the economy and make better use of what is available.

When I talk about economic diversification, it does not mean just taking a horizontal approach and creating different products. In the case of the forest industry, it would not mean researching opportunities in the aluminum sector. That is not the problem. We need to look at how to add value to the raw material that we have and how to develop secondary or tertiary processing. As a result, a product that was not competitive initially would become competitive because it would have a much more specific niche. We support that approach.

Let us take the example of the Saguenay region. In partnership with Industry Canada and the Quebec government, we have provided funding for the Aluminum Technology Centre, an institute which will be dedicated to carrying out research into tertiary and quadrennial stage transformation of aluminum. Obviously, the results will not be immediately evident. We are aware that the Saguenay is going through a difficult period, but the seeds of progress have been sown, and all that now remains is for us to nurture them and watch them grow.

Senator Ringuette: I would like to make one last comment. I agree with what you said, however, the agency must recognize that the regions do not have the necessary capital to make such investments, investments which involve far too much risks given that all businesses go through a development process, as you illustrated in your outfitter example.

It takes several years to implement a marketing strategy to attract clients, and to grow a business from an initial investment to a full-fledged operation. Our investment programs must recognize that an entrepreneur cannot necessarily start to pay down capital costs shortly after having started up his business.

We do not want to draw the life blood from them, we should not be asking businesses to over extend themselves financially.

Mr. Saada: I did mention outfitters, but we do not finance outfitters. We do, however, finance regional tourism associations that are mandated to promote the development of the tourism sector through tools available to the industry abroad.

Obviously, access to capital is a significant problem. While we are on the subject, I should point out that the funding which we provide to businesses is virtually always on the condition that we will be reimbursed. However, the funding that we provide to economic development organizations does not have to be reimbursed. The reimbursement rate is excellent; I believe that it stands at around 78 per cent, which is extremely high.

Senator Ringuette: ACOA's rate is 91 per cent.

Mr. Saada: We will just have to work even harder.

Senator Ringuette: Indeed.

Mr. Saada: That being said, when we talk about access to capital, we are not usually talking about huge sums of money. Businesses often simply require a helping hand to get them started. For example, the regional CFDC in the Magdalene Islands provided assistance to young people starting up businesses as part of a youth strategy. I know that you might find what I am about to say difficult to believe, but it is no less true: around two years ago, 80 businesses headed by young people were set up on the Magdalene Islands, of this number 78 are operational and some have employed additional staff. The strategy involved providing a helping hand, not tens of millions of dollars. We provide that helping hand.

Could we do more? I hope so. If the budget is adopted, we will receive a substantial revenue increase, which will, I hope, allow us to do even better. You are right in what you say, this is something of which we are aware, and on which we have been working for a long time.

Senator Nolin: Thank you for participating in our review. I would like to continue to explore the issues that Senator Ringuette so rightly raised. I would like to focus our discussion on the authority that you are seeking in section 16 (4). Subsection 4 addresses designated areas and communities; could you begin by explaining to us what you mean by the term "designated zones"? Second, I would ask that you help us to better understand the criteria that would be used to define these zones, regions and communities; and, finally, could you please explain what differentiates one from the other?

Mr. Saada: I would like to give two simple examples — one dating from the past and another that we envision for the future. We are all aware that the Gaspé, North Shore and Magdalen Islands regions were affected by the fishing moratoria. Given such a specific problem, our action had to be much more focused. For a designated zone in a given area, undergoing a very specific problem, it is essential that more focused and sustained action be taken.

As for the future, with respect to the impact of forestry management in Quebec, you are well aware that the province of Quebec has just passed Bill 71 following the tabling of the Coulombe report. Bill 71 provides for a 20 per cent decrease in access to wood and coniferous trees in particular. There has been a tightening of regulations, which was a desirable move. I would like to commend the Quebec government's courage because this was an absolutely healthy thing to do. However, there are consequences, and mitigation measures must be taken. The Quebec Minister of Finance and myself have concluded an agreement under which we will not only continue to inject funds in certain areas as is currently the case, but in addition, we will attempt to strengthen the system and strike a coordination committee to better target joint action for the benefit of businesses who are suffering the consequences of this decrease in lumber supply.

Nonetheless, this action cannot be perceived as something that locks us in, but rather as something that allows us to better channel our action to address a specific problem. In the Outaouais region, there is a problem with leafy trees. There has been a tightening of criteria, as we have been aware of for some time now. Also at issue is of course softwood lumber and Bill 71. All of this results in a host of industries that are affected by this specific problem.

Senator Nolin: I believe that the regional committee of elected officials has just tabled a report on this subject yesterday.

Mr. Saada: I have heard of it, but I have not had the time to read the report. It is obvious that we must intervene, under this framework. I take this as an example. With respect to the softwood lumber issue, what is of concern to me is that it strangely reminds me of the textile situation approximately 10 years ago. We cannot allow ourselves to get to that point and measures must be taken immediately. This a targeted industry and our action will be targeted as well. We are not necessarily dealing with geographic zones; we may be talking about zones, sectors, industries, industrial sectors.

For a long time, there has been a lot of flexibility. I want to move beyond partisan issues. Ever since this department came into existence, needs have been adapted as new crises emerged which prompted us to intervene in an increasingly focused fashion in order to assist a given sector.

Senator Nolin: You have just made reference to the specific nature of your action. With respect to the new department's work, how does that translate into your operations with the department's personnel? Are there employees who are responsible for analysis? Is the Government of Quebec your main analyst? Do you have personnel to monitor effects, and follow up on decisions? How did you come to this conclusion based on the example of the textile industry from the past, and the modern example of the softwood industry? Do you have analysts? How is this reflected in the makeup of your personnel?

Mr. Saada: I cannot go into detail with respect to who does what.

Senator Nolin: I just want to be certain because you have the powers to do so, you organize yourselves in such a way so that you can appropriately invest in a given zone or community, and designate it.

Mr. Saada: Indeed, the department possesses all the expertise. I would like to refer once again to the regional offices we have. They are not only points of service, but also very proactive centres. They anticipate problems. Given their structure, they go in the field and contact the economic stakeholders who are affected by the problem. They are our front lines. Before getting into detailed analyses, we have a clear concept of what is happening the reality on the ground because these offices are set up there. There is excellent cooperation between the regional and federal levels, as well as between the province, the chambers of commerce, industrial promotion organizations, etc. We have a truly solid foundation, not including our technical experts, and the economists who work at Canada Economic Development.

Senator Nolin: Are your regulations subject to a timeline or is it indeterminate? Do you think about introducing a set time period when deciding to designate a zone or a community?

Mr. Saada: Generally, that is done.

Senator Nolin: The regulatory power you are asking for is of general application for the province of Quebec.

Mr. Saada: Exactly.

Senator Nolin: Under clause 4, you ask for permission to obtain the power to designate. This is an extraordinary power.

Mr. Saada: Yes.

Senator Nolin: My question, therefore, is as follows. Do you have intend to introduce a notion of temporality for the next five or ten years?

Mr. Saada: First, if you will, allow me to point out that this power to be used by the minister as well as the regions.

Senator Nolin: I understand, but it is you who will exercise this power.

Mr. Saada: We established a program to mitigate the effects of the fishing moratoria. This program had a set duration, as did the one for lumber. For the textile industry, the Context program was extended by five years. We prefer working this way for several reasons. We must maintain a certain level of predictability in what we do. We cannot hand over a blank cheque and let things slide. We must be able to monitor the evolution of the problem. If we are too long-term in our forecasting, the problem may change and we will not be in a position to adapt accordingly. A certain period of time must be set in order to give ourselves the necessary flexibility to extend the program, if necessary.

Senator Nolin: A region, community, or zone must not develop the automatic reflex of saying to themselves "I do not have to make such huge efforts, because federal big brother will always kick in to help me"?

Mr. Saada: We share this point of view. In fact, regions are not only seeking assistance, but they also want the ability to develop. Take for example the Gaspé region. Not so long ago, I would have never thought that the Gaspé region would have attracted so much investments in the area of wind energy. This is one developing sector. Of course, there are problems stemming from the moratoria on fishing. However, another sector is developing. It is obvious that things are changing. Examples such as these can be cited frequently. One must understand that flexibility is key to all of this. Our intervention must be large-scale, sustained and coordinated, all the while remaining adapted to change. We must not bind ourselves to ad vitam aeternam definitions.

Senator Nolin: For clarification, there is a similar clause that resembles section 16 of the Atlantic Canada Opportunities Agency Act, however the same wording is not used in subclause 4. I will read both texts. Is it just a mistake, or is it an expression of the government's wishes? In the bill to Establish the Economic Development Agency of Canada for the Regions of Quebec, you say in subclause 3 of clause 20, with respect to the similar powers the minister may, under this section, exercise with regard to a designated area or a community to "exploit the opportunities for improvements in employment identified in a designated area." In clause 4, you tell us that regulations can be made, under this provision, for designated areas or designated communities with respect to possibilities to improve employment opportunities. Are jobs no longer productive in Quebec?

Senator Ringuette: It is because we are more productive than others.

Senator Nolin: Did you deliberately lower the bar? How do you define productive employment for Atlantic Canada? What would a different minister do?

Mr. Saada: I would get straight to the point. There is no ambition to do things differently just for the sake of doing things differently. The approach we want to take is probably the same, and I do not want to pass judgment on what is contained in the Atlantic Canada legislation because I am less familiar with it. We do not want to create temporary jobs that risk being artificial or which would appear that we are stimulating the economy. We are looking long term, well-rooted, which is why we talk about "productive."

Senator Nolin: The word "productive" is used for the Atlantic region. You want to improve the situation, as do we, you simply do not use the same words.

Mr. Saada: Indeed.

Senator Ferretti Barth: This bill was adopted with amendments in the House of Commons. What were these amendments and the reasons why they were put forth? This bill is very interesting for Quebec. I see that there is a willingness on the part of the Government of Quebec to collaborate.

Mr. Saada: I will have to do some research in order to answer your question in detail. However, I want to stick with what is fundamental, if you had examples of cases.

Senator Ferretti Barth: It is interesting to see how the House of Commons reacted to this bill and the reasons invoked. Could you share this information with us, if the chairman allows it?

The Deputy Chairman: Certainly.

Mr. Saada: For now, I can provide you with an answer but which will be limited to the vital elements.

Senator Ferretti Barth: Very well.

Mr. Saada: The bill talks about the social economy. If memory serves me correctly, the NDP wanted us to be more explicit on social economy businesses' accessibility to existing programs for small and medium-sized businesses that do not operate in the social economy. In other words, the NDP wanted us to place more importance on the social economy in the bill. That is our intention. As such, we accepted the amendment with great pleasure.

In defining the word "business", we also included the terms "business" and "social economy in business" throughout the text. Following that, amendments were made to clarify certain things. For example, we wanted the minister to be able to sign agreements with the Government of Quebec. This was clarified more explicitly, and I did not see any problem there.

Another proposal put forth by the Conservative Party was to build into the bill a prohibition on the agency to run ads during an election campaign. This practice exists already. I am told that this is the very first time that such a provision has been written into federal legislation.

Senator Ferretti Barth: Very well.

Senator Nolin: Clause 11, subsection (1)(a) clarifies the purpose of your department.

Mr. Saada: Exactly. I would therefore be pleased to send this information to you. I am only citing a few examples of changes that have been made.

Senator Ferretti Barth: This bill is very interesting in several respects. I find it particularly positive that the Government of Quebec is willing to work in partnership. Earlier, you went through a list of partners. This bill seems to talk about more direct action with actors working at the regional level. This new element is to the credit of the federal government.

According to what you say, this agency would be recognized as a department. Therefore, why wait five years before tabling an assessment report to Parliament? I find this timeline to be rather long. Is that the way to proceed? What is the reason for that timeline?

Mr. Saada: This report is just one among many others. We also prepare a yearly report on plans and priorities with adjustments covering the next three years.

This question ties in somewhat with the one asked by Senator Nolin a few minutes ago. When we set up programs, some time must be set aside to evaluate the impact, draw conclusions, and report. We have to wait until the work is done. Somehow, such is the process.

With respect to the five year timeline, I believe that other departments operate the same way as well as ACOA. It is important to understand that this is just one way for the department to report to Parliament. Each year, we may be questioned on our budgets, mission, plans and priorities. Parliament has several ways of making us accountable, and we are very conscious of this.

Senator Ferretti Barth: As you know, community centres have been of great concern to me for the last 32 years. When you talk about social and economic development, you mentioned non-profit humanitarian centres. Is there anything provided for community centres? Non-profit community centres affect a large portion of the population. My community centre has some 16,400 members.

Non-profit organizations carry out day-to-day work. We are constantly trying to find ways to operate on a permanent basis in order to ensure services to the entire population. There are economic and social issues, because the better of people are, the more they contribute to society.

Mr. Saada: One must understand that the Economic Development Agency of Canada is a department whose primary objective is economic development.

When I referred to social development, I was not talking about intervening directly in social areas, but to spur economic health that would improve people's quality of life.

Senator Ferretti Barth: Nonetheless, you give out subsidies.

Mr. Saada: We work with organizations that foster economic development. Take for example a business incubator, which is a non-profit organization that provide services to emerging businesses which would allow them to come into being and develop. On the South Shore of Montreal, CEDEM Techno is a company that created seven high tech businesses during its last mandate. We have just renewed its mandate. This is the type of business we are talking about.

Senator Ferretti Barth: I put my next question to you, but I would put it to the Prime Minister Paul Martin, if he would allow me. There is several organizations such as the FADOQ, which has been serving senior citizens since 1969. Its sole responsibility and sole desire is to maintain a segment of our society healthy, and to work on a voluntary basis, to assist people living in their natural setting. There is been a wave of wonderful projects.

The fact that these people remain in good health, that they do not need to go to the emergency room, nor to the CLSC, and that they spend a lot of time in francophone communities where they live, spend money, and take part in many activities and hobbies, is a social capital.

Mr. Saada: Of course. Each department has a different mandate. There is a department responsible for issues regarding senior citizens. It is obvious that I cannot answer your question on how it is managed. However, I will cite a very simple example that may reassure you. Earlier, I talked about companies that provide assistance to develop communities. There are some 50 organizations of this kind across Quebec, that became properly incorporated, and that all have boards of directors. Often, these organizations will seek out retirees who are still in full control of their faculties and who possess the necessary experience. They are put to work in order to continue developing the social setting.

With respect to other questions, I believe that they fall outside the framework of my department.

Senator Ferretti Barth: I am seeking subsidies.

Mr. Saada: The subject is interesting. However, my department cannot answer your questions.

Senator Harb: With respect to economic assistance for a region, who suggests the idea? Is it the agency, the province, or the clients?

Mr. Saada: That is an excellent question. As a department, we are not able to create projects. We do not create projects. We support projects that are created by the industry or community. We facilitate the beginning stages during which a project is coming to light, for example, through our incubator program, coordination organizations, and other source of proactive measures. Nonetheless, we cannot replace the industry or the community in creating projects.

In other words, the department assists in setting up and developing projects that are launched by people working on the ground.

During the debate on Bill C-9, we talked about the Saguenay region which is losing a great number of jobs. From the moment businesses were first shutting down, I ordered that priority be given to projects that had already been submitted in the Saguenay region, so that they could be realized quickly. If projects exist, they end up at my office, I accept them, and we move ahead. If the projects do not exist, I cannot invent them. That is the rationale behind the department's intervention. We are not there to replace the social economy sectors. Our mission is to support, assist, and encourage local initiative.

There is the example of the textile industry which is undergoing difficulties and which, in Quebec represents 50 per cent of the market. It is an important factor. While factories were closing down, we did not understand why we could not compete with China or India on basic commodities and that we needed to diversify our activities, create new niches.

There is a business in the region of Granby, that has done just so. This company diversified its textile, by making it much more refined. The company is called Stetfast. This business now produces ignifuge and antibacterial textile that may attract the interest of the U.S. army.

Stetfast invests in research and development, and the federal government contributes through investments to make sure the company will continue to fly higher and further. Stetfast creates jobs, and is taking up a greater place in the textile industry, but it remains nonetheless that the government could not have invented Stetfast. The federal government may only help in realizing projects.

Senator Harb: Will the Auditor General have the responsibility of checking the books of the agency, as she does with other agencies?

Mr. Saada: Absolutely, just as it is done with other departments.

Senator Nolin: My questions will have to do with the power to strike committees under subclauses 4, 5 and 6 of clause 4.

I would like to hear your thoughts on how these committees will be established, among others, because the regulatory power conferred to you is not clear. How do you envision these committees if they exist? If they do not exist, what kind of activities would these committees carry out? How will you appoint their members?

Mr. Saada: I must tell you immediately that we do not have any committee yet. Earlier, we talked about expertise and skills. If we are experiencing a specific problem, we believe that it would be useful to call upon expert advice other than our own experts.

Let us assume that in a given sector, we need the advice of the people who work in the field, and who are available thinkers. They can certainly help us see further, and better understand. There is nothing preventing us from asking them if they are interested in participating.

Senator Ferretti Barth: It is absolutely essential for those people to be involved.

Mr. Saada: I am talking about the makeup of a committee as such. It is a subject somewhat specific.

Senator Nolin: You are already consulting the stakeholders because that is part and parcel of your mission. If this is not clear enough, amendments must be proposed.

Mr. Saada: It is very clear.

Senator Nolin: From the start, we have been talking about better collaboration between different players. My question is very precise; it pertains to the committee of experts.

Mr. Saada: An advisory committee may be established in case it might be needed. Currently, such a committee does not exist and it is difficult to predict how these committees will be set up. As minister, I have not had that experience, and I do not know if Mr. Pépin has had any experience in establishing a committee of experts.

Mr. Serge Pépin, Director/Counsel, Economic Development Agency of Canada for the Regions of Quebec: I can tell you what an advisory committee is. This committee cannot be conferred decision-making powers that belong to the minister.

Senator Nolin: Judging from the minister's answer, I gather that these powers are exercised on an ad hoc basis.

Mr. Pépin: Absolutely.

Senator Nolin: In fact, a precise need must be met, at a precise moment, in confronting a given situation.

Mr. Saada: Exactly.

Senator Ringuette: Last year, I conducted a study on the seasonal economy.

The Gaspé region went through a difficult period that affected the fishing, lumber and tourist industries. During my study, I heard revealing comments about these sectors where efforts must be made to create permanent jobs.

However, we also need seasonal workers, because in the short run, without the necessary human resources, we will not be able to produce. In the forestry sector, there is a lack of effective management of forests as well as a lack of training for the next generation of forest workers, in the Gaspé region, on North Shore, as well as in the Outaouais region.

In your relations with the provincial government, what are you going to do to send the message that in the province of Quebec, the forestry sector must be able to provide programs to young people so that they may become professional forestry workers?

Mr. Saada: We can only intervene by way of support to what the Government of Quebec can do. As you know, with respect to forest management, this issue falls under provincial jurisdiction. I quickly cited an example of what we are doing. The Government of Quebec passed Bill 71 which provides for better management of coniferous forests. It is very good, I say this with a great deal of respect.

The Government of Quebec told us, later on, that it is contemplating a management measure in which it will invest, and expressed the desire to work with us to mitigate the consequences.

This is how we approach things. The role of the Government of Canada is not to replace the provincial government but to give assistance. These areas of jurisdiction are provincial, but the population is directly affected, in any case. Can we do something to help the people concerned?

Senator Ringuette: Indeed, the two points that I mentioned were raised by the community. Since you deal directly with communities, could you participate in a community round table to raise the concerns of a community which would have been designated or not?

Mr. Saada: Absolutely. Politicians and government officials are always talking to one another. We are in constant communication on all sorts of subjects.

I will give you an example of what we can do. If we want to help a research centre in a given region, the Government of Quebec has its own responsibilities, its own programs, its own objectives, etc. We work together to make sure that all of that takes shape with the resources of all three levels of government. This allows people to remain in the region.

That is one way of taking action. We do not get involved in the programs, nor do we intervene in an area of jurisdiction that does not belong to us. Nonetheless, we support initiatives that do help achieve our goals.

There are many solutions and ways of working together, but even when communities notify or share their concerns about a topic not under federal jurisdiction, I do not have the right to intervene. I simply do not have that right. However, what I can do is raise awareness among my colleagues, who are aware of the problems in any case. They do live on the same planet we do. They live in the same communities.

We talk about the issues, and we see what each of us can do to help solve the problems using our own means and our own areas of jurisdiction.

However, the fact that there are regional problems affecting a given area of jurisdiction does not give the federal government authority to step in and do what others should be doing. That is not how it works.

Senator Ringuette: You are facing quite a challenge, and you are certainly the right person to take it up. I wish you the best of luck.

The Deputy Chair: Well, that concludes today's meeting. Minister, Ms. Tremblay and Mr. Pépin, I would like to thank you for the help you have given the Committee on National Finance.

Tomorrow, we will continue consideration of Bill C-9 with a clause-by-clause study. If everything goes well, we should be able to table our report in the Senate on Thursday. The third reading stage will begin next week.

Thank you very much.

Mr. Saada: That is excellent. I look forward to seeing you tomorrow.

The committee adjourned