Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 18 - Evidence - Meeting of March 1, 2007

OTTAWA, Thursday, March 1, 2007

The Standing Senate Committee on Agriculture and Forestry met this day at 9:03 a.m. to examine and report on rural poverty in Canada.

Senator Joyce Fairbairn (Chairman) in the chair.


The Chairman: Good morning, honourable senators and witnesses, and good morning to all of you watching our Standing Senate Committee on Agriculture and Forestry.

Last May, this committee was authorized to examine and report on rural poverty in Canada. Last fall, we heard from a number of expert witnesses who gave us an overview of the issue in Canada. On the basis of their testimony, we wrote an interim report that we released in December and that by all accounts, and maybe to our own surprise, struck a nerve across the country.

We are now beginning the second phase of our study. Our goal is to meet with rural Canadians, the rural poor and the people who work with them. Last week, the committee held meetings in all four Atlantic provinces and we heard first-hand about the unique challenges of being poor in that special region of Canada.

Next week, the committee will travel west to hear the concerns of the rural poor in Western Canada. That will take us through British Columbia, Alberta, Saskatchewan and Manitoba.

In the meantime, the committee wants to hear from as many people as possible. To that end, it is holding preparatory meetings in Ottawa ahead of the western trip. This morning's witnesses are from a very fine organization called Western Economic Diversification Canada.

Western Economic Diversification was created in 1987 to lessen the West's economic dependence on natural resources and to help economically viable communities. Here today to tell us about Western Economic Diversification's work in that part of Canada are Mr. Fernandez, Assistant Deputy Minister here in Ottawa, and Ms. Paxton Mann, Assistant Deputy Minister based in British Columbia.

Welcome to you both. This is an important discussion because Western Economic Diversification has become an important factor in Western Canada and its progress.

Ardath Paxton Mann, Assistant Deputy Minister, British Columbia, Western Economic Diversification Canada: Thank you for the opportunity to present the experience of Western Economic Diversification Canada, or WD, as it is known, with rural economic development and diversification.

Today I would like to talk about the lessons we have learned from our experiences, to provide examples of WD's successful economic initiatives, and to conclude with a summary of why we believe these initiatives are successful. Since I am tailoring my remarks to meet the time allotted for the presentation, they will necessarily be brief. However, I will provide the clerk of your committee with a complete text of our remarks and examples of WD's success stories in French and English in individual packages for each member of the committee.

I have had an opportunity to read the interim report of this committee entitled Understanding Freefall: The Challenge of the Rural Poor. I have also had the opportunity to review the testimony before this committee in February of my colleague, Ms. Eleanor King, Director General of the Atlantic Canada Opportunities Agency, ACOA, our sister agency in the Atlantic provinces.

I would like to preface my presentation with some preliminary comments. As much of your material and witnesses have already told you, the challenge of addressing poverty, be it rural or urban, is one that is worthy of our collective attention and effort. I would respectfully note that it is a challenge that exceeds the scope of any single department or agency, such as WD, ACOA or HRSDC, to mitigate in an absolute way, as your interim report points out.

Like our sister agency, ACOA, we see economic development and diversification as important activities, key responses in what should be a tool kit of responses to address the challenges of rural poverty. As past witnesses have noted, poverty takes many forms, so the solutions must be tailored to meet those many forms and specific needs.

Because we deliver our services in both urban and rural settings, WD must be cognizant of and responsive to the evolving community needs.

Today's rural out-migration is tomorrow's urban housing and social services challenge. Interestingly, the interim report's conclusion that rural communities themselves must come up with economic development and poverty alleviation ideas that are best suited to their particular needs resonates extremely well in some parts of the West where there is a frontier bootstrap mentality.

Our presentation will build from our mandate to cover programs, service delivery partners and the processes by which we work with communities to help them identify their economic needs and work to create sustainable economic opportunities. We will end with some examples of our successes.

I would also like to note that most WD programming does not make any special distinctions between urban and rural communities. Our programming is available to all applicants, and for our purposes, ``rural'' is considered to be any community outside the seven major urban cities in Western Canada. I know that is probably the umpteenth definition of rural that you have received in your deliberations thus far, but for the purposes of WD's data collection, that is how we deal with our rural factor. Our major urban centres in the West include Victoria, Vancouver, Edmonton, Calgary, Saskatoon, Regina and Winnipeg. I note that this is different from the descriptors used by HRSDC, Statistics Canada, the Organisation for Economic Co-operation and Development, and the Rural Secretariat, to name just a few.

With 80 per cent of the population of Western Canada residing in these centres, it would be fair to say that the majority of our available funding is accessed by western innovation clusters, institutions, associations and entrepreneurs located in those communities.

However, there are exceptions. In 2005-06 in British Columbia, 54 per cent of our program funding went to communities outside the Lower Mainland Region and Southern Vancouver Island. Increasingly, WD has been paying growing attention to building innovation, clusters, and the skills development capacity of institutions in the rural West.

My colleague, Mr. Fernandez, will take you through WD's mandate and some of the background and context to our policy development and program delivery.

Keith Fernandez, Assistant Deputy Minister, Ottawa, Western Economic Diversification Canada: As you know, WD is a western-based department that is mandated to promote the development and diversification of the economy of Western Canada and to advance the interests of the West in national economic policy. We focus on a set of interrelated objectives, on building the West's innovation capacity, on the enhancement of the region's entrepreneurial drive and on supporting community economic development. Our advocacy efforts support and reinforce our overall strategic directions.

WD has a budget of approximately $352 million. Of that, roughly $54 million goes to support 380 employees across the West and in Ottawa. About $299 million supports our grants and contribution programs such as the Western Diversification Program, WDP, the Western Economic Partnership Agreements, WEPAs, and Infrastructure Canada programming. Those numbers are from the 2006-07 budget.

Of the $299 million roughly for grants and contributions, $123 million is in grants and contribution programming that allows our minister to set strategic directions and priorities for the department. The balance of $175 million is programming established by other departments, which we deliver on their behalf in the regions.

Our operational philosophy, because we are a small department, is built on partnerships and maximizing the leveraging that may be available to us. In order to maximize the economic development initiatives the department supports, we work in very close partnership with all levels of government — provincial and municipal — as well as with universities, financial institutions, the private sector and the not-for-profit sector. In many cases, these partners bring with them capacity, expertise, financing and other required resources. The one aspect of WD's operations that distinguishes us from the other regional agencies is the fact that WD does not provide any direct assistance to business. We are not in the business of picking winners and losers; we gave that up in 1995.

Western Canada's resource-based economy is currently experiencing unprecedented levels of growth and prosperity. This has given rise to the sentiment in some areas that the rich West does not need a regional development agency.

However, with this growth comes pressure on governments and communities at all levels as to how best to manage that growth in sustainable ways. It also reinforces the focus on diversification of the Western economy in preparation for the cyclical decline in natural resource exploitation that has been experienced in the past.

Working within our economic mandate, WD is involved in a variety of projects from community and business development to helping build institutional and individual capacity. Again, let me stress that this occurs in both rural and urban settings. As well, while our programming has no Aboriginal-specific focus, it remains inclusive of Aboriginals, be they on or off reserve.

I will now turn it back over to Ms. Paxton Mann, who will talk about how we deliver our economic development programming in the rural West.

Ms. Paxton Mann: Let us look for a moment at how WD delivers its economic development and diversification programs in the rural West. I will talk for a moment specifically about a suite of programs that you have had referenced before in your hearings: the Community Futures Development Corporations and the good work they do at the community level.

In 1995, WD assumed the stewardship of the Community Futures Program in Western Canada. Earlier, we said that most WD programming does not make any distinction between urban and rural communities. The CF program is the exception to that.

As you have heard from previous witnesses, especially other regional development agencies, we agree that the Community Futures Program has been successful in helping rural communities develop and implement local solutions to local problems identified by local people. There are 90 non-profit CFs, four CF associations and one pan-West CF group in the West providing virtually 100 per cent rural coverage in Western Canada and serving an estimated 3.1 million non-metropolitan residents. Of the 90 non-profit CFs, four are specifically Aboriginal Community Futures organizations.

The Community Futures Program was established based on the tenets of community economic development, CED, which you have heard a fair bit about, a community-based and community-directed process that combines social and economic development to foster the well-being of communities.

Community volunteers who understand social issues and recognize opportunities are a key factor in the success of the CFs. In 2005-06, CFs engaged over 2,500 community-based volunteers, including board members, who provided over 86,000 volunteer hours.

A strong entrepreneurial capacity is key to thriving, healthy communities. In the last five years, the 90 CFs in Western Canada have made over 6,700 loans totalling over $220 million, which leveraged an additional $315 million in funding from other sources.

These investments have been projected to create or maintain more than 2,100 jobs in rural Western Canada.

CF loans do not go to assist only those in the economic mainstream. Over the last five years, 13 per cent of the CF loans have gone to Aboriginal entrepreneurs, 5 per cent to entrepreneurs with disabilities and 9 per cent to young entrepreneurs. Obviously, we want to get those figures up.

Loans are relatively small. The average CF loan over the last five years has been in the ballpark of $32,000.

CFs are a key component of WD's Western Canada Business Service Network, which links the Community Futures Development Corporations with Canada Business in each of the four Western provinces, Women's Enterprise Initiative offices and Francophone Economic Development Organizations. Those four parts of the network are joined together in providing integrated services to small and medium enterprises and community-based organizations across Western Canada in both official languages.

The majority of the services provided by other members of the service network are delivered on a province-wide basis, including rural areas, and many are delivered in cooperation with Community Futures. We have included some examples of specific rural initiatives in your background materials. Please feel free to look at those at your leisure, and we will be happy to answer any questions you may have.

Local CFs also develop new approaches that are transferable to other communities. They may come up with a best practice that works for them; and in passing that information along to their community, they may be able to tweak it a little and come up with something that works in several neighbouring communities. Before you know it, you have five or six CFs able to practice the same model. It is working there as well.

For example, in Manitoba the Parkland Community Futures Development Corporation's Experienced Worker Pilot Project helped participants aged 55 and over remain connected to their farms and communities. This pilot project was such a success that the Canadian Agricultural Skills Service used it as a model for implementation across the country.

The CF network has also provided an established basis for community delivery of provincial and other federal programs and has effectively delivered special-purpose government economic adjustment programs, such as a response to fisheries closures, the softwood lumber dispute, forest fires and flood mitigation. Depending upon where you are from in the country, you are probably familiar with all, a few, or most of these issues. Certainly Senator St. Germain would be familiar with the fisheries closures and softwood lumber disputes in British Columbia, as well as our forest fire mitigation and adjustment.

After the United States imposed duties on softwood lumber in 2002, 180 forest-dependent communities in B.C. experienced 4,000 direct, permanent job losses. Community Futures in British Columbia, working together with WD, successfully delivered the Softwood Industry Community Economic Adjustment Initiative, or SICEAI. In a period of just 13 months, CFs in B.C. approved 145 projects totalling $50 million of federal money, which leveraged an additional $95 million and created or maintained somewhere between 2,500 and 3,000 jobs. There are some project examples that I can give you during the question period, if you wish.

Earlier in my presentation I discussed the partnerships we have with provincial and municipal governments. These are very positive and cover a wide range of issues, including rural economic development. In fact, they have become the tripartite approach to community development, which has been around for about 15 years and has a long-standing history in the workings of the three levels of government in communities. I was just speaking to Senator Fairbairn about that in the province of Alberta.

The Rural Community Economic Development, CED, project in Alberta is a three-year, $2.1-million pilot project. It is part of the Western Economic Partnership Agreement with the Province of Alberta and includes three components: the rural CED pilot project funds; hiring CED specialists to work directly with communities in developing their initiatives; and funding for the regional economic development alliances, or REDAs.

Mr. Fernandez: The Saskatchewan Northern Development Agreement, NDA, was signed in October 2002. It is a $20-million, five-year agreement between WD and the Province of Saskatchewan targeting projects that promote and support sustainable economic development in Northern Saskatchewan. The tripartite management committee, to which Ms. Paxton Mann referred, is a unique administrative structure in that Northerners, including First Nations and Metis people, jointly participate in the decision-making process related to the implementation and ongoing governance of the NDA.

Ms. Paxton Mann: I will speak for a moment about the Municipal Rural Infrastructure Fund, because while we have commented that WD does not differentiate between rural-specific programming and urban-specific programming, there are some exceptions, both within our own program rubric but also within programs that we may deliver on behalf of other government departments.

The Municipal Rural Infrastructure Fund, MRIF, is one such program. The program is owned by Infrastructure Canada but delivered by WD in Western Canada. We administer programs on behalf of other government departments, as I mentioned. The Municipal Rural Infrastructure Fund makes strategic investments to improve and increase the stock of core public infrastructure in areas such as water, waste water, culture and recreation. At least 80 per cent of MRIF funding is earmarked for municipalities with populations of fewer than 250,000 people. Over the next five years, WD will invest $278.3 million in Western Canada through the Municipal Rural Infrastructure Fund.

This fund was designed to mitigate the concerns of small rural communities that felt that significant funding was not being allocated to them because they were small and because of issues like rural depopulation and perhaps reduction of transportation on highways and bridges. Their concern was that perhaps the infrastructure dollars did not need to be allocated to those communities. In fact, this program has indicated that that money does need to be allocated and it is being allocated.

I would like to talk about our Aboriginal initiatives for a moment. I said that our programs are not specific to Aboriginal or First Nations people. Those remain the responsibility of Indian Affairs and Northern Development.

We deal with communities. We cannot deal with communities and say that we will deal only with this kind of community and not that kind. As I am sure is the case across the country, there are First Nations people on reserve, there are First Nations people in urban centres, and the majority of them seem to go from one place to another on a fairly frequent basis. In Vancouver, for example, we have First Nations people who spend three days a week on reserve and four days a week in the Downtown Eastside. Are they on reserve for the purposes of federal funding and programming, or are they urban Aboriginal peoples for the purposes of those kinds of funds? We deal with the needs and challenges of the communities and incorporate Aboriginal needs into those broader community needs.

Sixty-two per cent of Canada's Aboriginal population, which is 800,000 people, live in Western Canada. The majority of these live off reserve in cities and towns. In Saskatchewan and Manitoba, Aboriginal people represent almost 15 per cent of the population, and the numbers are growing three times faster than the general population.

Aboriginal participation in the labour force still lags behind the Canadian participation rate, but the unemployment rate is still 2.5 times higher than the national rate. It is estimated that over 200,000 jobs will be needed by 2016 across the West to meet the demands of a growing Aboriginal youth population. A key challenge for federal and provincial governments and First Nations alike is to strengthen Aboriginal participation in the economy and to find the ways to get ready for 2016 when they will be taking up 25 per cent of entry jobs in the economy.

Today, we are involved in a variety of projects from community and business development to helping build institutional and individual capacity. Our strategy is focused on enhancing Aboriginal participation in the mainstream economy. We will be happy to give you some examples of that in the question period.

At the outset of the presentation, I noted that economic diversification and development activities of the regional agencies are an important tool for communities and individuals seeking to improve their status and quality of life. We recognize that economic development is far less likely to be successful if academic standards or health, housing and environmental conditions are weak. To be truly successful, economic development and diversification require the deployment of other complementary tools that can address the social, ecological, and cultural well-being of communities.

However, we have also learned that if our range of activities is too broad and we try to be all things to all people, it limits our capacity to have a real impact in the areas within our mandate. Therefore, to address those other needs, which are preconditions to economic development and diversification, we rely on those departments and agencies that have a specific mandate to provide them. However, we also rely on our proven track record in coordinating the cross- departmental and cross-government responses required to meet those community needs.

Recognizing that rural poverty is multifaceted, we hope that we have been able to give the committee a sense of what we in WD feel have been among our successful contributions to mitigating some of these issues in the rural West.

We thank the committee for the opportunity to share our experiences and successes, and we look forward to your questions.

The Chairman: Thank you very much.

I would like to comment on the way economic development has worked in my province of Alberta. Alberta was the first in Canada to sign onto the agreement. Due to the reality of Alberta having two big cities while the rest of the province is rural, it was possible to organize things such that the rural communities would always be involved in the activities that you have carried out. It has been a very helpful and successful operation.

Some of your programs are aimed at women. You had one that was very helpful to women entrepreneurs. Is that program still in operation?

Ms. Paxton Mann: Yes, it is. That is our Women's Enterprise Initiative, and it is a healthy and vibrant part of our service delivery network in Western Canada.

Senator Segal: Thank you for being here to assist the committee.

Looking at the history of rural development policies in Canada all the way back to the 1950s, with the Agricultural and Rural Development Act and the Department of Regional Economic Expansion and all that has come as a result, I think it is fair to say that Atlantic Canada Opportunities Agency was an evolution away from ARDA and DREE to a different approach, and that WD was part of that same evolution. It was about the core premise of geographically created disadvantage, that by virtue of being far away from the economic and compelling market forces where the population was most dense — Quebec and Ontario — economic opportunity was not fairly distributed and government agencies in those regional markets, as they were viewed then, were somehow to re-establish the balance and contribute to some equality of opportunity.

I understand that your agency does not have a particularly rural mandate, that it is for an entire region of the country. That being said, it is hard to look at Western Canada and not conclude that, while some parts of the economy are very strong, with labour shortages, remarkable economic growth and outstanding investment, which is a great credit to all involved, we are still finding, in places like rural Manitoba and rural Saskatchewan, both inside and outside the Aboriginal communities, pockets of poverty and isolation. While I understand that you have that broader mandate, I assume from your testimony this morning that tilting your budgetary priorities to deal with that particular kind of problem is really not within your scope. You can try to be helpful and responsive through Community Futures organizations and others, but you really cannot say, ``Calgary will do okay without us. It looks like they have their problems managed for a while. Vancouver appears to be on a roll. However, there are these smaller communities in greater difficulty. Let us focus the majority of our budgetary dollars on them.''

I hear you saying that you do not have the mandate to do that. You are not unresponsive, but you cannot tilt the majority of your budgetary focus in that direction. Do I understand that correctly?

Ms. Paxton Mann: There is a ``yes and no'' answer to that. First, there is not the same cohesion across the four Western provinces as there is in the Atlantic provinces. The geographies and, therefore, the issues of rural poverty in each of the four Western provinces are very different. There are people who would say, ``How can you talk about rural poverty in a province like Alberta, which is on fire?'' In fact, you can. There are pockets of poverty. As a matter of fact, my colleague from Alberta would say that even though the economy is as hot as it is, it is not a diversified economy; it is an oil and gas economy and that is about it.

In the rest of the provinces, we have taken our tools, like the Community Futures Program, which is absolutely specific to rural and remote areas. The criterion is that it has to be outside urban areas. We have focused hard on ensuring that we drive to success in that programming. We have started to look at developing innovation hubs in rural areas where there are clusters in conjunction with universities and community colleges in the interior or in the North that have managed to attract some private sector involvement, and there starts to be some manufacturing and export opportunities and that spins out. That is the situation where we could take, within our programmatic descriptors, some of those dollars, and with the agreement of our minister and of the provincial government and our municipal partners, we could allocate a certain program over a period of time to meet certain needs specific to rural. Building rural innovation, for instance, is a classic example of where that would work quite well.

Senator Segal: In your testimony you referred to the pilot project for broadband access for the Aboriginal community. We have heard at this committee about one problem young people in rural areas face. The kids in the city can download quickly and have access to the full spectrum. The phone companies, for whatever reason, probably the small size of the market, have not been prepared to invest heavily in broadband capacities in sparsely populated areas, and those kids with long download times are not quite as engaged with that digital world, which we know is important. A former premier of Newfoundland who was a minister of the Crown in a prior administration claims to have resigned because there was not sufficient support for a national broadband program. Do you have any plans to expand this pilot project, which is now in Aboriginal communities, to other parts of isolated rural Western Canada where the presence of broadband would be of great value to the kids but might involve more than just the Aboriginal community? I do congratulate you on the initiative with respect to our Aboriginal brothers and sisters.

Mr. Fernandez: The short answer is that we would work in partnership with Industry Canada, which is the lead on the broadband project and, where possible and where it makes good sense, we would do that. We do support them in a number of areas. Again, the issue comes down to budget and what is available. Building on the previous answer of my colleague, there is always a balance in this kind of difficult equation of opportunity and need and how you play with a fairly small budget.

Senator Segal: I was quite impressed when I met with Manitoba Agriculture, Food and Rural Initiatives, because they had decided on a strategy of having many small offices in rural Manitoba. In each office, there would be an agronomist, an economist and someone involved in the social services. The farming community, where it was in distress, had a point of contact that could link them up. The federal government has all its offices in Winnipeg. You have advocated successfully on behalf of the Pacific Gateway initiative, very much to your credit. Have you ever considered advocating for the movement of large government offices away from expensive real estate in big cities to smaller communities where they could be part of the economic infrastructure, or do you view that as beyond your mandate?

Ms. Paxton Mann: Senator, you are dealing with a federal government department whose head office is located in Edmonton, so that is a good start. It is something that is always considered when we are looking at diversifying economies. One of the first factors that are identified is that if you move government offices, the economy of the surrounding area changes significantly. The provincial governments in the West have looked at this quite significantly. Premier Campbell in British Columbia has made a number of changes in moving head offices, particularly in the resource industries. The Oil and Gas Commission is up in the Peace. The mining institution is in the Northwest. There are a number of those kinds of things happening.

Having watched both ends of this equation happen, my sense is that there are advantages to having those locations in each and every small community for the availability of the people in the community, and there can be the disadvantage of the duplication and overlap of services and the increased overhead of having them in each community. You have to try to find the balance there.

I do think that broadband technology is starting to resolve some of those problems of distance and access. The provincial governments and the First Nations governments and the private sector in the Western provinces are working together to bring high-speed access to all communities, regardless of size and make-up. At the end of this fiscal, Premier Campbell in British Columbia was able to say that there was high-speed, broadband access in every community — not every household, but through every school and every library throughout the province. I believe that is the same in Alberta. I am not sure about the other two provinces. It is also working with TELUS and the other large telephone carriers.

Senator Callbeck: The chair has already mentioned the Women's Enterprise Initiative. I come from Atlantic Canada, and the Atlantic Canada Opportunities Agency has been supportive of women entrepreneurs in the last number of years. Senator Oliver has just come back from leading a trade delegation of women entrepreneurs from Atlantic Canada to Boston, which was extremely successful. I had the honour to do that two years ago.

We are seeing an increase every year in the number of women entrepreneurs in our area. Statistics show that they are extremely successful and that women are very good at running businesses. How does the Women's Enterprise Initiative operate? How are the programs delivered? Do you deliver the programs directly, or is the money given to women's organizations to deliver those programs?

Ms. Paxton Mann: The money is given to the women's organizations. They receive approximately $1 million each year to run their operations, and they are operating much like the Community Futures, using volunteers and community-based delivery models to deliver their programming. Much of their programming in the West has involved video-conferencing and workshops, where they are sharing best practices one with the other, building up mentoring networks and sectoral alliances. They have been very successful as well. We have not, unfortunately, had some of the mission-type opportunities for women in business in the West that you have had in the Atlantic provinces, but we look to do that through some of the ERI initiatives that we are developing with the new posts on the West Coast.

Senator Callbeck: You mentioned workshops and mentoring. You do have programs.

Ms. Paxton Mann: Yes.

Senator Callbeck: When you say they are administered through the women's business organizations, how many are there? Is there one in every province, or do you have several throughout the provinces?

Ms. Paxton Mann: It is different depending upon each province. In British Columbia, there are offices in Vancouver and Kelowna. Kelowna is the head office, and the primary work of the Women's Enterprise Initiative in B.C. is in the interior and in rural communities, although there is one big conference. In Saskatchewan and Manitoba, their activity is primarily in rural locations as well. In Manitoba, where there is a large number of francophone communities, the Women's Enterprise Initiative and the francophone communities work together to develop opportunities for francophone women to get together and talk about their business successes.

Senator Callbeck: You said that 80 per cent of municipal rural infrastructure funding goes to communities of 250,000 people or less. Statistics Canada's definition of a rural community is less than 10,000. Why is there such a gap between 250,000 and 10,000? What per cent of that money goes to communities with 10,000 or less?

Ms. Paxton Mann: I do not have that figure available at the moment, but I would be happy to ensure that we get that information to you.

Senator Callbeck: I would like to see that breakdown.

Ms. Paxton Mann: We would be happy to do that.

Senator Oliver: Thank you for the two presentations. You gave a great overview and I learned a lot. I appreciate that.

It is my view that one of the biggest crises in the globe today is not so much climate change but a shortage of skilled workers. I know that is a big problem in Western Canada. I have given addresses in many countries in the world on this crisis. I have concluded that we have enough people in Canada and in other countries, but we are not using the talent that we have and we are not using it for a variety of reasons.

As you know, it is Government of Canada policy — and it has been policy for more than 20 years — that there are in Canada today four groups of Canadians who are not treated fairly. They are women, Aboriginal, disabled and a group called visible minorities. In your presentation today, you dealt with all but one of those groups. You talked about the francophone community, the disabled community, the Aboriginal community and women entrepreneurs, but absolutely no reference was made to the visible minority community. One of the big problems with Canada today is that visible minorities who have the skills and talents are not being employed and used to fill those gaps where there is a workplace shortage.

I am wondering, first, why have you excluded that group? Second, are there no visible minorities in Western Canada? Third, what are you doing to try to break the crisis of the looming skills shortage and to use visible minorities who have the talent to fill those places?

Ms. Paxton Mann: There were about four questions there. If I forget one of them, please remind me. The oversight of visible minorities was just that, an oversight. We work very hard to ensure that not only our workplaces but also the projects that we are working with include visible minorities. I am fortunate in that I am the assistant deputy minister in Vancouver. Vancouver has become a cosmopolitan city that looks like the United Nations. It is a wonderful opportunity for our workplaces to reflect the communities we serve and to see that richness in the workplace. Probably our biggest challenge has been attracting Aboriginal people into that workplace, but we are making a lot of progress there.

I think your next question was what we are doing with respect to skills development. Here, again, the situation in the West is very different. British Columbia and Alberta are facing similar challenges; Saskatchewan and Manitoba are not to the same extent. The needs that employers will have in the future will be very different from the needs that they have right now. Trying to anticipate what those needs will be and the order of magnitude of those needs is the $64,000 question. Universities and colleges are working with industry groups and employers to try to come to those conclusions and ensure that the curricula that they are teaching in post-secondary schools and institutes of technology, universities and community colleges will meet that future need.

Our big problem now is meeting the need for skills right now. We have the Olympics coming in British Columbia in 2010 and Alberta has the oil patch. We are practically at a stage where warm bodies on the street could strap on a tool belt and walk across the street and get a job. The shortage is a huge challenging issue. Minister Solberg was in Vancouver last week announcing some new stipulations around immigrant workers that would allow workers to come in from other countries to work on construction sites.

We are looking for ways to process training more quickly, to process workers more quickly, to get them on site more quickly and to ensure that their skills are being developed within schooling scenarios where they have a combination of book learning and practical learning in a way that they are more readily usable in the workplace.

Senator Oliver: Are you looking at recognition of credentials?

Ms. Paxton Mann: Yes, it is huge.

Senator Oliver: What specific initiatives do you have?

Ms. Paxton Mann: Both the federal and the provincial governments are looking at those issues across the country. Minister Solberg is looking at that issue with his provincial colleagues across the country. It is the number one priority for premiers of Alberta and British Columbia. They have written that into a memorandum of agreement.

Senator Oliver: I raise this issue because 70 per cent of the people who come to Canada each year as immigrants are visible minorities. If their credentials are not being accepted, we are losing out in being able to fill those skilled positions. That is my concern.

Ms. Paxton Mann: That is a huge issue.

Mr. Fernandez: I wish add to my colleague's response. It was definitely an oversight on our part. We take it for granted because they are integrated into any one of those categories. For example, on the work we do with the Francophone Economic Development Organizations, Alberta is an example. We work with the college that is affiliated with the University of Alberta, and it serves the francophone community. There are a lot of visible minorities in attendance at that college. We have provided them with the opportunity to provide that kind of training to the rural communities as well through the broadband channels. Their programming is available to those communities who wish to stay at home in their local community but gain the educational advantages that urban settings have. There are minority communities there.

On the business side in Vancouver, there is a Chinese organization called S.U.C.C.E.S.S. that is helping us make advances into the Asia-Pacific marketplace. They work with the Chinese community and business community to enter into those export markets and prepare them to participate in those export markets. On the same front, we also work with the Indo-Canadian associations and organizations. It is not that we do not have that, but it is integrated into our programming and it is second nature to us.

The Chairman: You were talking about training and the need for the special skills that the workforce demands now. I think a foundation part of that is literacy. Without that, the books, the training and everything else fall to the side. That is something we still, as a country, have not realized. We have not come to the conclusion that it should be given the same kind of prominence as so many other programs that we have in our governments all across the country. Low literacy skills are there. That is a reality. I am not pointing fingers at any particular government.

Everyone who is looking to elevate the workplace and training must understand that if over 40 per cent of Canadian adults do not have the fundamental reading, writing and numeracy skills that we take for granted, then we have a problem. We have the ability to solve that problem, but so far we have not given it the prominence it should have.

Senator St. Germain: Ms. Paxton Mann, in your presentation you said that these investments have been projected to create or maintain more than 2,100 jobs, but your text says 21,000. Which figure is it?

Ms. Paxton Mann: The figure is 21,000.

Senator St. Germain: You said that in 1995 you quit picking winners and losers. You seem to be more oriented toward working with organizations such as Community Futures. In my understanding, when Western Economic Diversification Canada was established in 1985 or 1987, its mandate was to diversify the Western economy, which has traditionally been agriculture and resource oriented, by creating jobs that are not totally dependent on a particular industry.

Can you tell us whether the objectives of WD are being met?

Mr. Fernandez: When we were first established, along with ACOA, the approaches of the regional agencies to program delivery were similar. In 1995, the government and the minister at the time made a conscious policy decision, based on consultations with stakeholders, et cetera, that we should not be doing direct assistance to businesses, that is, with WD being the direct contact and determining which projects would be funded.

Since then, we have turned that responsibility over to the service delivery networks. They have parameters, terms and conditions under which they are to operate with us. We set broad objectives that are in line with the government's direction, and they work with the communities to find ideas that can use that kind of funding, which explains to a large measure the success we have had with these communities and with individuals. There is community buy-in to the idea and the funding is then made available. It is not WD justifying why they chose to fund a particular project. The board of directors of the community association will have determined which projects to fund based on community consultations, input from their stakeholders and an understanding of the viability and strengths of their community.

Ms. Paxton Mann: As we got out of that business, we found ourselves naturally in the business of building strategic alliances and collaborative networks. The contribution of WD allowed various federal departments, provincial ministries, outside agencies, universities, research institutions and members of the private sector to sit around a table in a way they never had before. The WD contribution was able to keep that happening while something was developing to meet the strategic needs in the community.

We did not believe it was our role to be in the business of choosing one applicant over another. It was left to Community Futures to do the due diligence on business proposals that came forward. We were doing the more strategic building of alliances and partnerships.

Senator St. Germain: Do you not think, though, that there could be a drift towards WD becoming a funder of social services rather than funding economic diversification, which was the original objective of the process? I realize the complexities of picking winners and losers, but there is a danger that you could become just a funder of social services programs, which theoretically could be taken over by special interests groups, rather than fulfilling the objective of diversifying the economy.

I am thinking of the BSE situation, bovine spongiform encephalopathy, and our chairman is conscious of the impact that had on our rural communities. Some people were in dire straits as a result of it. I wonder about the response of your organization to these types of needs where diversification is a necessity.

My concern is that, rather than being an economic diversification vehicle, the organization could theoretically become a funder for social service programs. If I am wrong on that, please correct me.

Ms. Paxton Mann: That is a great question and one that has come to our attention often. Over the last six or seven months, the department has gone through what our previous minister called a visioning exercise for that very reason. There were concerns that, as a result of trying to be all things to all people, the department might have strayed a bit from the focus of economic development and diversification.

The challenge is that, in looking at building sustainable communities, it is very difficult to look at economic development and diversification in a box without consideration of social services, health services, educational services and whether people have a place to live. There is a balance.

Out of those round tables that the minister held across the West came resounding recommendations from attendees for more focus on economic development and diversification within the department and to not let the department get diluted into the social side of things, that there were enough agencies taking care of that.

Senator St. Germain: In your presentation you mentioned your response to forest fire and flood mitigation. The focus of this committee's study is rural poverty. In the case of BSE, which had a huge impact on our agriculture rural community, is there any way WD can respond to a crisis like that? Did they?

Ms. Paxton Mann: There is and we did.

Mr. Fernandez: A key role we play in the Ottawa environment is the advocacy role with the central departments that are located here. My office gets involved in that quite extensively.

The other key side of our regional role — offices such as Ms. Paxton Mann's — is the federal presence. Ms. Paxton Mann chairs the federal regional council, for example, in British Columbia, which is made up of senior federal representatives. They get together to deal with crises such as the forest fires. We deal with the advocacy side here in Ottawa. Ms. Paxton Mann's group will identify the needs, and I will let my colleagues in central departments here know what those needs are. We do not necessarily get involved in actually providing that unless the government decides there is a delivery issue and then our CF network helps us with that delivery because they can feed us the intelligence on what exactly the community needs. For example, during the forest fires, CFs in those affected areas were able to feed, through Ms. Paxton Mann to me and into Public Safety and Emergency Preparedness Canada, information on the community needs as opposed to the fire needs, suppression and those kinds of things and the impact from a social perspective. Our role was then to advocate for those kinds of requirements.

We try to respect our economic focus and we will provide capacity building economic activities that the community may need through the CFs, but we will allow our coordination aspect to overlay that in terms of getting the other federal departments into the game.

Senator St. Germain: Thank you. Let us ensure our viewing audience knows that CFs are Community Futures.

Senator Mahovlich: I thank the witnesses. This has been very enlightening.

With respect to the Canada-Saskatchewan Northern Development Agreement, we have had witnesses appear before us who have found that the youth of the communities of Northern Saskatchewan have all left and gone to Fort McMurray where they see a future. It gives me an ill feeling when the youth leave; there will be a big problem. Are you finding that in Saskatchewan?

Ms. Paxton Mann: I am not from Saskatchewan, but I know my colleague from Saskatchewan is finding that is the case. As a matter of fact, our previous minister's two boys both left Saskatchewan to work in the oil patch.

I do not think the phenomenon has been around long enough for us to be able to say it will be permanent dislocation. I think in many cases, the young people have decided to take a couple of years off university and go make a bundle of money in the oil patch; then they can come back, go back to school and be able to pay their tuition and not graduate with a huge student loan, which will get them off to a better start in life.

I do not imagine too many of the young people in the oil patch would tell you they will stay any longer than a couple of years. I think people who are there seriously are people who have come from places like Newfoundland and Labrador who are there for serious long-term reasons because they are raising families somewhere else.

I have an interesting comment to make about young people, seeing as I have raised a whole bunch of my own as a single mom in a small interior community. I believe that what was the rural depopulation to the urban areas, particularly in Alberta and British Columbia, has turned right around. There is a repopulation of rural areas because young families with young children cannot afford to live in the urban centres. They are looking at quality of life: they want fresh air; clean water; safe places for their kids to play; inexpensive access to things like skiing, golf, camping and recreational activities for their children. You cannot get that in Vancouver. You cannot get that in Calgary. Therefore that move to the rural areas is starting to happen. As it happens, the quality of life in those communities improves to a point where it becomes contagious. All of a sudden a community that may have been feeling like a hopeless, status quo, we-are-never-going-anywhere kind of community gets a spark, and that spark helps to turn it around. Examples are Mount Pearl in Newfoundland; Kimberley, the Bavarian City of the Rockies; Chemainus, the little town that could; and Trail, which becomes the tourism capital of British Columbia, a little wee town that had a very unattractive smelter. Those communities found hope, something to hang on to.

The provincial government's decision to move universities and training institutes outside of Vancouver and Victoria has been a big driver in British Columbia. We have the University of Northern British Columbia, which has predominantly programs for First Nations and forestry; the University of British Columbia's Okanagan campus, which is hooked up by video to operating rooms in the Vancouver operating theatres; Thompson Rivers University in Kamloops, which is an applied science university; and the University College of the Fraser Valley, which concentrates on value-added agriculture. I know all these B.C. examples, but my colleague is reminding me there is the Red River College in Manitoba as well as others in other provinces.

That pulls professional people into the community surrounding the universities and institutes. It pulls doctors, dentists, therapists, music teachers, sports coaches and all those small business and services that follow families that come to universities. All of a sudden you have manufacturers and export. We have watched that happen in areas like the Kootenays in the southeast of British Columbia, which went from being pretty boring places when I lived there in the 1970s to being real tourism meccas for small and medium enterprises now.

Senator Mahovlich: On a different topic, you mentioned softwood lumber and how many jobs were lost. We were at the East Coast and found the ripple effect there also.

Since the government made the agreement, have things improved? I know you mentioned you found 2,500 jobs when this problem occurred but there are still many people out of work. Have they been activated since the agreement?

Ms. Paxton Mann: I cannot speak to the return of the dollars to the manufacturers as a result of the signing of the agreement. I have not done the analysis, although my staff has. I would be happy to make that available to you.

I do know that the jobs that were lost — and I am talking about jobs lost as opposed to layoffs — as a result of the tariffs early on, four or five years ago, were lost forever because of retooling of mills, new skills required, small mills closing down. Those jobs were either maintained somewhere else or new skills were developed, new opportunities were developed in those communities through the SICEAI program, and they are continuing to this day. That was just a two-year program with the sunset, but it helped to show communities what else they could do that could still keep their economies afloat separate and apart from running an old mill with old equipment that would not manage much longer anyway.

Senator Mahovlich: You mentioned loans and the Community Futures. Are these loans returned and is the success rate high? When I borrow money I have to return it and I find that the banks are knocking on my door if I do not follow through. Do you operate the same way?

Ms. Paxton Mann: Senator, our chief financial officer is over there; can you see him beaming?

Mr. Fernandez: I do not have the particular statistics of the success rate immediately at my fingertips, but the loans are certainly repayable and they are at market price plus. The success rate is quite good because the Community Futures personnel work with the individual.

We found that we needed to ensure that there was aftercare. In other words, after you have borrowed the money, somebody needs to keep working with you to ensure that your expertise in managing that money remains at a high standard. The CFs are now providing that kind of assistance. My colleague will give me a quick lesson here.

The Chairman: Why not have him come up.

Ms. Paxton Mann: I will introduce Jim Saunderson, our chief financial officer within Western Economic Diversification Canada.

Jim Saunderson, Director General, Corporate Finance and Programs, Western Economic Diversification Canada: Thank you for the opportunity to answer the question, Senator Mahovlich. I do not have the dollar figure handy, but what my apparently ineligible handwritten note said is that the Community Futures Program averages about $2 million for each of the 90 Community Futures Development Corporations we have in the West, and overall they are now holding loan funds that are greater in value than the amount given to them by governments over the 20 years.

Like banks, they certainly do experience some losses, given that they are dealing with overall higher-risk loans. However, they are successful in getting that money back, with interest, and they have, overall, grown it larger than the amount initially provided by governments over the last 20 years or so.

Senator Oliver: What is the default rate? Is it 10 per cent or 15 per cent or 20 per cent defaulting?

Mr. Saunderson: We think it is around 10 per cent or a little less than that.

Senator Mahovlich: Are there also loans provided to Aboriginals?

Mr. Saunderson: Yes, very much so. A number of Community Futures Development Corporations deal either exclusively or in large part with Aboriginals, particularly in the northern parts of the provinces. Overall, the CFDCs would deal with any clients that come through their doors, including Aboriginal people.

Ms. Paxton Mann: They work closely with the Aboriginal Capital Corporations as well.

Senator Callbeck: What is the average amount for a loan?

Mr. Fernandez: The average is $32,000.

Ms. Paxton Mann: There are many smaller loans. We have a micro-loans program as well, where the average loans may be $4,000 or $5,000. Sometimes in the case of women in small communities who want to start up self-employment, the loans can be between $600 and $1,000.

Senator Callbeck: How long have you had the micro-lending program?

Mr. Saunderson: The Community Futures Program goes back to the mid-1980s and was originally with Employment and Immigration Canada. It transferred to our department in 1995.

Senator Callbeck: I am asking particularly about micro-credit.

Mr. Saunderson: The Women's Enterprise Initiative, which provides the loan faculty that Ms. Paxton Mann was talking about, has been in place since about the mid-1990s. The loan fund arrangements we have with the credit unions also began in the mid-1990s.

Mr. Fernandez: The four Women's Enterprise Initiative organizations, one in each province, were established in 1995 and they have managed $20 million in loans since that time.

Senator Callbeck: You mentioned the credit unions. Are these women's organizations involved with the credit unions in this micro-lending?

Mr. Fernandez: They actually have their own funds to provide directly, because we have provided them with $20- million worth of funding that they can lend themselves. It is entirely possible, as part of their counselling services and advice they provide to women entrepreneurs, that when their requirement for capital increases, they would put them in touch with credit unions, such as Vancity or other similar types of organizations that might be operating in those areas.

The Chairman: I was very pleased, Ms. Paxton Mann, that you raised comments regarding how the growth of smaller educational centres and colleges or small universities has made an extraordinary difference. That includes my own hometown. When I was growing up there was no university or community college. Now they are thriving and bringing in young people, and even older people, from rural areas that never would have had that opportunity and did not have it when I was growing up. It does, then, bring in people from outside the community who wish to set up a business. Sometimes very large businesses, even from the United States, will come up to Canada now because of the assurance they have of a skilled work force in some of these smaller towns and cities. It has made a huge difference, as you said, in the interior of British Columbia.

Ms. Paxton Mann: If you go to the interior of B.C., you may want to ask some questions about what has been done in the communities of Cassiar, Logan Lake and Gold River. These are communities that folded as a result of being single-industry towns. They have been revitalized and re-established.

In one instance, the housing was made so reasonably priced that it became a seniors' community. The seniors have developed all kinds of new jobs. It is a community of senior entrepreneurs and it has become a tourist attraction as a result. Some interesting things have happened to some of those communities that would otherwise have folded and gone away.

The Chairman: Thank you very much. This has been an interesting session today. We all know that what you do is out there, but as we go into the West, this was an important meeting to have. I thank you and all those you work with for doing what you do. Once again, I cannot speak for other areas of Canada, but certainly in the West, in Alberta, there is a whole different world there now as a result of what has happened through these programs that you manage. We thank you for that.

The committee adjourned.