Proceedings of the Standing Senate Committee on
National Finance
Issue No. 89 - Evidence - February 27, 2019 (evening meeting)
OTTAWA, Wednesday, February 27, 2019
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study the Supplementary Estimates (B) for the fiscal year ending March 31, 2019.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I call the meeting to order.
[English]
My name is Percy Mockler, senator from New Brunswick and chair of the committee. I wish to welcome all of those who are with us in the room and viewers across the country who may be watching on television or online. Also, as a reminder to those watching, the committee hearings are open to the public and also available online at SenCanada.ca.
[Translation]
I would now ask the senators to introduce themselves, starting on my left, please.
Senator Forest: Éric Forest from the Gulf region of Quebec.
[English]
Senator Klyne: Marty Klyne, Saskatchewan.
[Translation]
Senator Pratte: André Pratte from Quebec.
Senator Forest-Niesing: Josée Forest-Niesing from northern Ontario.
Senator Moncion: Lucie Moncion from northern Ontario.
[English]
Senator Boehm: Peter Boehm, Ontario.
Senator M. Deacon: Marty Deacon, Ontario.
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicole Eaton, Ontario.
[Translation]
The Chair: I would also like to introduce the clerk for this evening, Barbara Reynolds, who is replacing Gaëtane Lemay, and our two analysts, Alex Smith and Shaowei Pu, who team up to support the work of the Standing Senate Committee on National Finance.
[English]
To the witnesses this evening, our committee continues its study of the Supplementary Estimates (B) for the fiscal year ending March 31, 2019.
Honourable senators, we have before us two organizations invited to give an overview and comment on their funding requests. First, from VIA Rail we welcome Mr. Jacques Fauteux.
[Translation]
He is the Director of Government and Community Relations. We also have Patricia Jasmin with us.
[English]
She is Chief Financial Officer.
And from Innovation, Science and Economic Development Canada, we welcome Mr. Philippe Thompson, Assistant Deputy Minister, Corporate Management Sector and Ms. Andrea Johnston.
[Translation]
She is the Assistant Deputy Minister at Innovation Canada. We also have Krista Campbell with us.
[English]
She is Director General, Digital Transformation Service Sector, Connected Canada Branch.
To the witnesses, welcome to all of you and thank you for accepting our invitation to explain and answer questions on the budget requested to the Standing Senate Committee on National Finance. I have been informed that Mr. Fauteux will be first to give comments, to be followed by Mr. Thompson.
[Translation]
Mr. Fauteux, the floor is yours.
Jacques Fauteux, Director, Government and Community Relations, VIA Rail Canada: Thank you, Mr. Chair and ladies and gentlemen of the committee. I am happy to be meeting with you in a former heritage railway station to provide you with testimony about VIA Rail’s accomplishments in recent years, and to answer your questions.
My name is Jacques Fauteux. I am accompanied by my colleague Patricia Jasmin, our Chief Financial Officer.
VIA Rail just celebrated its fortieth anniversary in 2018. We are a non-agent Crown corporation which, on behalf of the Government of Canada, provides intercity passenger rail service that is safe, efficient, and environmentally responsible.
[English]
Our services are divided into three main components. First, the Quebec-Windsor corridor, which generates about 90 per cent of our passenger counts in revenues.
Second is the long haul, overnight services, which connects, in the east, Halifax to Montreal and, in the west, Toronto to Vancouver, and a long list of communities in between.
Third is regional and remote services serving communities with limited or no transportation services, for example, Winnipeg to Churchill, Manitoba, Senneterre, Quebec and Sudbury-White River.
A corporate shift to a customer-centric model in 2014 has led to unprecedented passenger and revenue growth, with 2017 being one of our best years with double-digit growth year-over-year.
Continuing to 2018 and beyond, the combination of service improvements such as the increase of daily frequencies between Ottawa and Toronto, we have increased about four frequencies during the last four years. That has enabled us to connect 600,000 more Canadians to their destination of choice.
This means in 2018 we moved close to 4.8 million people and those people left their cars at home in order to connect to their destination of choice. Ridership and revenues have increased by 30 per cent since 2014.
When I explain this to my kids, I say people are reconnecting with the train, and that’s because they see the value of passenger rail. These improvements, combined with the effective management of cost per passenger mile, have reduced by 28 per cent, from 39 cents to 28 cents per passenger mile in that 2014 to 2018 period and has resulted in the betterment of about $40 million to the bottom line.
This is a tangible example of the success of our business and strategy, which aims pretty much to improve not only sustainable mobility of Canadians but we want to be good stewards of the public purse.
[Translation]
Those positive results could not have been achieved without the involvement of our 3,000 employees from coast to coast. They are creative and they really do use their ideas to create a customer experience that surpasses that of many other transportation companies.
Despite some constraints, such as an aging fleet, our employees all over Canada remain motivated by their desire to provide an excellent travel experience to our customers while effectively managing public funds.
Before I close, I must mention that sustainable mobility has never been so important for us, because a number of initiatives have gained momentum in recent years. I would like to mention the modernization of our infrastructures. A few weeks ago, we announced the installation of some accessibility infrastructures in our station in Ottawa. In other words, it means that more people who may have mobility problems will now be able to travel with us more easily. For example, we now have a GPS system inside the station that allows visually impaired or blind people to navigate around obstacles for themselves without a cane, or any system other than their phones, as well as other means of going directly to the train.
But we are not stopping there. We have changed the way in which we operate our trains by modernizing our fleet. Our oldest fleet, Heritage, will now be changing to allow those same people greater accessibility. Actually, the CNIB Foundation has recently highlighted the fact that our company has developed initiatives of that kind.
Also, in terms of the renewal of our fleet, we announced in December that Siemens would be our partner. Starting in 2022, this new fleet of trains will be available to our passengers. The passengers will have cars that are more comfortable, spacious, accessible and, of course, more energy-efficient. This is because we are moving from tier zero locomotives to tier 4, which use much less energy and produce much less pollution.
Finally, I must also mention our high frequency train project, which our shareholder is currently studying. This will allow us to redesign our service in the corridor so that it is better and more frequent for more Canadians,
[English]
Mr. Chair, I hope that my brief statement enabled you and the members of the committee to see the ongoing commitment of our 3,000 employees to the sustainable mobility of Canadians and their desire for more passengers to love the way with VIA Rail.
My colleague and I would like to reiterate our thanks to the committee for your invitation and we would be glad to answer your questions.
[Translation]
The Chair: Thank you, Mr. Fauteux.
Philippe Thompson, Assistant Deputy Minister, Corporate Management Sector, Innovation, Science and Economic Development Canada: It is a pleasure to be with you this evening. I am accompanied by my colleagues Andrea Johnston, Assistant Deputy Minister, Innovation Canada, and Krista Campbell, Director General of the Connected Canada Branch.
We are pleased to be with you this evening to provide you with an overview of Innovation, Science and Economic Development Canada’s Supplementary Estimates (B) for 2018-19.
[English]
The department is requesting $6.1 million in these supplementary estimates, the largest item being requested through these estimates, representing approximately 60 per cent of the ask, is $3.7 million for the Canada-China Year of Tourism.
Prime Minister Trudeau and Premier Li announced that 2018 would be Canada-China Year of Tourism and agreed to double the two-way flow of tourists by 2025. The funding requested would go toward activities that were used to showcase Canada’s tourism industry in China and our work with the tourism industry domestically to improve its readiness for the Chinese market.
More specifically, ISED partnered with provincial and territorial governments to hold events that promoted Canada as a tourism destination for Chinese travellers. In addition, the department continues to offer tools and workshops to help Canadian businesses understand the Chinese tourist and help adapt existing products and services to the Chinese marketplace.
[Translation]
The department is also requesting $1.3 million for the creation of an ISED-led secretariat for small business and export promotion, to provide national coordination of the Women Entrepreneurship Strategy and to collaborate with regional development agencies and other government departments to support the development and growth of women entrepreneurs and their businesses.
The Women Entrepreneurship Strategy will allow better alignment of government resources and interventions to support woman entrepreneurs under a single federal framework. It will be centred around four key pillars: helping women-led businesses grow, increasing access to capital, improving access to federal business innovation programming, and enhancing data and knowledge.
[English]
Mr. Chair, it is also important to note that the supplementary estimates are the last of the fiscal year. As such, adjustments and priorities are presented using frozen allotments to constrain appropriate authorities when necessary.
For the fiscal year 2018-19, the total amount of frozen and voted authorities for ISED is $343 million as of January 16, 2019. The majority of these frozen allotments are due to the planned re-profiling of funds to future years. The two largest re-profiles represent $302 million, or 88 per cent of the frozen allotments, and are for the Innovation Superclusters Initiative and the Connect to Innovate program.
The department is re-profiling $182 million for the Innovation Superclusters Initiative, whose goal is to support business-led innovation superclusters that have the greatest potential to accelerate real economic growth for Canada. The industry-led program is of an unprecedented scale. There was a high volume of applications received and the program continues to involve 450 companies. They are working with five successful superclusters and are expected to generate $50 billion in GDP and 50,000 jobs over the next 10 years.
The superclusters are unique as they will contain large and small companies, post-secondary institutions and specialized talent and infrastructure. They will create jobs and encourage knowledge sharing, drive business specialization and help to attract anchor companies from around for world.
Following the application phase, it became clear that a fuller time period is necessary in order to provide certainty for the successful applicants, to private sector investors and to allow sufficient time to implement their ambitious strategies to address the gaps of their superclusters’ ecosystems. This resulted in the need to review the disbursement profile, including adding an additional year to complete the project in 2022-23.
[Translation]
The department is also reprofiling $120 million for the Connect to Innovate program, whose goal is to bring high-speed Internet to some of our most rural and remote communities — many of which are indigenous — that would be left behind without targeted government support. The reprofile is required primarily as a result of the time required to sign contribution agreements with recipients due to complexities in the size and scope of individual projects.
Since creating the Connect to Innovate program, the department has announced high-speed Internet for more than 900 rural and remote communities across Canada—more than triple the 300 communities initially targeted—including 190 indigenous communities.
[English]
CTI is focused on investing in backbone networks, the digital highways that carry traffic between communities. By focusing on backbone, ISED has designed a program that can complement the continued expansion of Last Mile Networks to households and businesses, whether that’s through private sector investments, programs from other levels of government or as a result of regulatory decisions.
The program focuses on rural and remote communities as the department found private sector investment was focused almost exclusively in high-density urban areas. This has meant more complex investment. By partnering with provinces, territories, municipalities and Indigenous groups and the private sector, CTI is doubling the Government of Canada investment, bringing the total investment in rural and remote connectivity to $1 billion.
Given the large number of stakeholders involved in these projects, many applicants require more time in order to secure and confirm co-funding. While it is currently expected that all remaining contribution agreements will be signed in 2018-19, given many recipients may not be able to benefit from a full summer build season, project spending had to be pushed back into future years.
[Translation]
In closing, Mr. Chair, I want to reaffirm our commitment to the stewardship of public resources. The resources being sought through the 2018-19 Supplementary Estimates (B) represent the necessary funding in order to deliver programs that are beneficial for the Canadian economy.
[English]
Furthermore, the funds which have been constrained in frozen allotments were necessary in order to realign the funding with the anticipated disbursements in future years. These realignments will ensure the most effective use of public funds and guarantee programs deliver on their expected results.
I would like to thank you all for your time and the opportunity to discuss with you today. My colleagues and I would be pleased to answer any questions you may have.
The Chair: I would like to ask —
[Translation]
— Senator Bellemare to introduce herself.
Senator Bellemare: Thank you for being here. I am Senator Diane Bellemare from Quebec. I am also the Deputy to the Government Representative.
[English]
The Chair: Senator Marshall and senators, we will continue our four-minute rule for questions and answers.
Senator Marshall: I usually go over.
My question is for VIA Rail. The high-frequency rail proposal, the $1.5 million indicates that is for completion. What is the total cost?
Patricia Jasmin, Chief Financial Officer, VIA Rail Canada: The project is $4 billion over four years. But, as you know, this project has not been approved yet. So the $1.5 million is really to do a due diligence analysis for shareholders.
Senator Marshall: So what about the due diligence process? How much has that cost so far? It is $1.5 million now. How much have you paid so far?
Ms. Jasmin: This is the first time we are getting money to fund a due diligence analysis, so we got $1.5 million.
Senator Marshall: That will do the whole process?
Ms. Jasmin: For this year.
Senator Marshall: Thank you. So how much next year? Do you have an estimate?
Ms. Jasmin: No.
Senator Marshall: Who carries that out? Do you carry that out internally?
Ms. Jasmin: It is Transport Canada.
Senator Marshall: Is the project going to be impacted by Bill C-69?
Mr. Fauteux: It depends, in the sense that if the project is approved before Bill C-69, then CEAA 2012 would apply. Our intent is to abide by any law which has been approved by members of Parliament.
Senator Marshall: Has VIA Rail taken a position on Bill C-69? I know that CN made a submission.
Mr. Fauteux: Our position is in the same way as our position is on Bill C-81, which is we will comply and do even better than what the government expects.
Senator Marshall: Thank you. The funding for fleet renewal, the $105 million, is that something that was anticipated? It seems odd that it’s showing up at the end of the year in supplementary supply.
Ms. Jasmin: The project was approved in the current year, but the funds have not been allocated before. So yes, we were anticipating this number. As you know, the contract is almost a billion dollars in six years. That’s the amount for the first year of the contract.
Senator Marshall: Could you give me an idea of what’s in the fleet, the renewal of the fleet?
Ms. Jasmin: As per the contract, this is the first amount that we owe to the vendor for the signature of the contract. It is an advance we made to the vendor for them to start the project. The first car will be delivered in 2022, and the last in 2024.
Senator Marshall: How many are there? How many cars?
Ms. Jasmin: Actually, it’s 32 train sets. A train set includes a locomotive and five to six cars.
Senator Marshall: Thank you very much.
The Chair: Thank you. You still had one minute left.
Senator Marshall: I usually go over.
[Translation]
Senator Pratte: My first questions go to the people from VIA Rail.
First of all, everyone is very pleased to hear that the trains in the Quebec City-Windsor corridor will be replaced by new modern trains. That is very good news.
Ms. Jasmin: Thank you.
Senator Pratte: A lot of questions have been asked and I would like to hear what you have to say about the fact that the contract does not seem to involve any local benefits from building the trains. The answer we have received is that it is because of free trade agreements.
Could you enlighten us a little on why that was apparently not a consideration?
Mr. Fauteux: First of all, I would like to thank you for that question, because we have been asked about it quite frequently and I feel that it is important to repeat the information.
In the first case, in terms of international agreements, yes, we made sure that we were complying with all the free trade agreements and other agreements with Europe and other jurisdictions. VIA Rail was subject to those rules. That is why we took that approach, as Minister Garneau mentioned in the House of Commons, and went to the international market.
However, at the announcement last December, Siemens committed to have 20 per cent of the process involve Canadian suppliers. Siemens has opened a Montreal office in Saint-Laurent, near Dorval, as well as an office in Oakville, Ontario. They also have a digital platform that allows suppliers to apply to participate, not only in building VIA Rail trains, but also in potentially supplying equipment for other types of Siemens trains.
In addition, albeit not for this fleet, but for other fleets, such as the renovation and modernization of our Heritage trains, more than $154 million have been provided to various Quebec suppliers and to VIA Rail, to build and upgrade some of our trains. Bombardier, CAD in Montreal and Rail GD in the Gaspé have been awarded contracts to renovate some of our trains in order to serve Canadians.
Senator Pratte: Thank you for that answer. Perhaps this is a little detailed too or complex for this committee, but it would be interesting for us to have more details about the “international agreements.” Perhaps that is something that you could provide to us later in writing.
I am struck by the fact that, with military equipment, for example, Canadian government policy is to encourage regional economic benefits. Perhaps defence systems are not included in the international agreements. I have no idea about that, but it might be interesting to have some more details about it.
Mr. Fauteux: We will gladly provide that information to the clerk.
Senator Pratte: I would like to ask the people from Innovation, Science and Economic Development Canada a question about the Connect to Innovate program.
What is the total budget for the program?
Mr. Thompson: The total budget is $500 million.
Senator Pratte: I understand that an amount of $182 million has been carried over to next year. What has been spent up to now? Or is the amount of $182 million the first part of the carry-over. Is that the case?
Mr. Thompson: It is a multi-year project. This is a new program that follows the previous one called Connecting Canadians. This year, we spent mainly operating funds and most of the money has been reprofiled over the next three years. So, for 2018-2019, we are talking about an available budget of $129 million. For the next year, the available budget was $175 million and we reprofiled $81 million from the amount of $222 million. So we are talking about $81 million next year and $41 million in 2021.
Senator Pratte: Great. Thank you.
Senator Forest: Thank you for being here.
Mr. Fauteux, we have a huge challenge throughout the global village we call Earth, particularly in Canada, given our wide open spaces and the fight against greenhouse gases. VIA Rail Canada is an indispensable player.
I live in Rimouski. If you go between the river and the rail line there, you are almost in my yard.
In the 1990s, the VIA Rail service was used a great deal, almost four times more than today. Each morning, a train left Mont-Joli for Quebec City. It came back in the evening. There was a train every day. Now three trains a week go by in the middle of the night. We are constantly told that it is because there are not enough customers. So the service gets reduced. But if you improve the service, you get more customers. This is the Quebec City-Halifax corridor, so it involves all the Maritimes, the Lower St. Lawrence and the Gaspé.
Are you planning to improve that service? Because today, you really have to want to use it. You have to be really committed. Then, you find that the station is closed. You have to wait outside. You almost have to shovel your way in.
Senator Pratte: Does the train stop?
Senator Forest: You almost have to jump aboard.
Senator Eaton: That’s not easy to do.
Senator Forest: It’s not easy and it’s not pleasant.
So, in your medium-term planning, do you intend to improve the service, because, actually, more and more people are inclined to use public transportation? You really are an important key player in this.
Do you have a plan? Yes, we know about the Quebec City-Windsor corridor, but for Quebec City-Halifax, do you have any similar projects?
Mr. Fauteux: Thank you for agreeing that the train is a good way to travel.
Senator Forest: It’s an excellent way to travel.
Mr. Fauteux: This is what we are hearing and seeing. We are hearing demands and requests like yours from your former fellow Rimouskois, but also from people in New Brunswick and Nova Scotia.
This week, the minister tabled in the House the summary of our corporate plan. I will not give you all the details in the summary, but, yes, clearly, we are talking about improved service for New Brunswick and Nova Scotia, where service would be daily, as you mentioned.
As for the link between Quebec City and Halifax, we are not developing another service at the moment because we are concentrating on the high frequency train. It’s like the anchor tenant in a shopping centre. It can generate most revenue in the corridor, which will help us get some financial rollover and allow us to invest in other parts of the network, such as Quebec City and the Maritimes, as you mention. I invite you to consult our corporate plan. I can share it with the clerk. It will let you see that we are not only looking to the east, but we are also examining other routes, like to Churchill, Manitoba. Before we had the problems with the track, we did increase services and capacity for our customers and we saw ridership increase.
Senator Forest: I completely understand that you want to put your efforts in a corridor where the customer density is greatest, like Quebec City-Windsor. But it is also important to keep looking over your shoulder.
Rail was the link that brought Canada together and Canada is much more than Quebec City to Windsor. We are currently seeing a lot of public will. I am speaking for our chair, who lives in New Brunswick, and also for all Canadians. There is a strong demand for the service, but you have to recognize that the service is not what it once was.
The Chair: That is a very good comment, Senator Forest, and it will be a good question for the second round.
Senator Forest: I have three for the second round.
Senator Eaton: You make a good case.
[English]
When are you expecting a response from Transport Canada for your business case for high frequency rail, which gets me excited every time I think about it? Imagine taking the train home. It would be fantastic.
Ms. Jasmin: Transport Canada got, in the 2017 Budget, money to fund the analysis of the project over three years.
Senator Eaton: Three years, so this will be your first year.
Ms. Jasmin: Correct.
Senator Eaton: So they will not really look at it before 2021 or 2022.
Ms. Jasmin: I’m not saying that.
Senator Eaton: I know you’re not. You’re funded for three years to do your analysis. It puts the decision off. I can’t get too excited; I hope I am still around for three or four years.
Mr. Fauteux: It would be fair to say that we’re working fairly well with our shareholder, Transport Canada, which is doing the due diligence. But for a project of that magnitude, it goes without saying that they need to do that due diligence.
[Translation]
Senator Eaton: Yes, but you have to push a little, or nothing gets done. I have another question for Mr. Thompson.
[English]
Our Arctic Committee did a tour of the Arctic and we realized that food security was lacking but also fibre optic cable. I’m wondering, there doesn’t seem to be anywhere in this new budget for monies for fibre optic cable specifically to go North. I’m thinking of Iqaluit, Nunavut, Kuujjuaq. Do you have plans in the future? How far are you going to push it?
Mr. Thompson: Thank you very much. This is a good question and this is the intent of the Connect to Innovate program. Ms. Campbell is managing the program so I am sure that she can provide a more fulsome answer than I can.
Krista Campbell, Director General, Digital Transformation Service Sector, Connected Canada Branch, Innovation, Science and Economic Development Canada: Thank you for the question, senator. The North is particularly important because so much of the North is satellite dependent. And satellite, while it can be a good option, for connectivity —
Senator Eaton: It’s not good enough for health or education. It can be varied.
Ms. Campbell: It can be varied. We do have significant projects that have gone forward in the North, one in Nunavut in particular has been very important. It is a satellite-based project starting to roll out and seeing improvements in communities, so they are seeing speeds above five, 10.
Senator Eaton: What they really need is fibre optic cable where they can download something right away, not take 24 hours to download an application.
Ms. Campbell: Correct. And I would say some of the satellite investments will make improvements. One thing coming out in the discussions that Minister Bains is having with his provincial and territorial counterparts is that this idea of building out fibre as far as possible in as many communities as possible is critically important in any kind of next round of investments. There will always be a few communities that are satellite dependent, that it will not be effective to get fibre optic cable everywhere, but trying to get to that 98 per cent or further is being discussed. But needless to say, it is very expensive.
Senator Eaton: That sounds wonderful, but do you have deadlines? Do you have markers, we’ll do that this year, this next year? Is there a concrete plan, or is this all just being discussed and hoped for? I’m sorry, I don’t mean to be rude. It’s just because we get so much of this lovely, feeling good stuff, but it would be lovely to know for the people in the North if there was a concrete plan and what the deadlines are.
Ms. Campbell: I would say that we have a very concrete plan and deadlines for the funding pots that we have available, and for the investments that we are currently making.
Connecting Canadians, which was a household last mile program, is winding up at the end of this fiscal year. There’s about $3 million left over just to tidy up a couple things next year. That did not particularly impact the North.
The Connect to Innovate Project program has two more build seasons going, until 2021, so there are specific deadlines and commitments with respect to that funding.
The broader question about national strategy around broadband connectivity and the investments is an ongoing series of discussions with Minister Baines and his provincial-territorial counterparts. I believe there are further activities expected over the course of May and June in terms of further discussions.
But no, we don’t have a specific commitment at this point on investment levels or commitments from provinces and territories. That will need to be developed.
[Translation]
Senator Forest-Niesing: My thanks to all the witnesses for coming this evening. Mr. Thompson, I would like to talk to you about the Women Entrepreneurship Strategy. In your introduction, you told us about it and about its objective of supporting women entrepreneurs. If I understand correctly, it is part of a federal framework that has four pillars: helping women-owned businesses grow, increasing access to capital, improving access to federal business innovation programming, and enhancing data and knowledge.
Can you help me better understand how all that will translate into practical terms by giving me more information about the specific initiatives you are going to undertake in this area, the ones you would like to undertake, and even further out, the performance indicators that will help to us measure the success of your initiative?
Mr. Thompson: Thank you for that question.
The Women Entrepreneurship Strategy is one of the major initiatives in the Supplementary Estimates (B). We were expecting a question about it. In order to give you the answer in as much detail as possible, we have invited Frances McRae, the assistant deputy minister in charge of the program, to join us. If I may, I would like to ask her if she can reply with as many details as possible. Is that okay with you?
Senator Forest-Niesing: Thank you very much. I always ask the question that needs someone else to come to the table. It’s a gift.
[English]
The Chair: If we can ask the witness to introduce herself please.
[Translation]
Frances McRae, Assistant Deputy Minister, Small Business and Marketplace Services, Innovation, Science and Economic Development Canada: Good evening. My name is Frances McRae. I am Assistant Deputy Minister of Small Business and Marketplace Services. I am pleased to answer the question.
The Women Entrepreneurship Strategy was announced in Budget 2018. It is a $105 million fund. Most of those funds are managed by regional development agencies. We are working closely with regional development agencies to ensure that there is national coordination across the country and that they can strengthen local networks and ecosystems for women entrepreneurs.
The fund has two components. The first component is essentially an ecosystem fund. What we mean by ecosystem is whatever support of women entrepreneurs there is in every part of the country, which varies from province to province and territory to territory. A request for proposals has been issued to share ideas from the regions, from people on the ground who understand what is and what is not in the ecosystem. This will allow them to identify projects that will strengthen local support. This is the largest component, with $85 million in funding. The other component, with $20 million in funding, will be used to launch a call for women entrepreneurs for project proposals that will help them grow their businesses. The government will provide a grant and the entrepreneur herself will also contribute to that project.
Those two components of the fund were announced in Budget 2018. The call for proposals closed in November and decisions have yet to be made. This is the largest investment. What we have before us is $1.3 million in appropriations that have been reallocated. This other project will enhance the knowledge and data we have on women in entrepreneurship.
We called for proposals. Applications were received and a decision was made and announced. Through a competitive process, Ryerson had what we call the “knowledge hub.” It is an ability to do research to share information on the situation of women in business. That is the amount that was added to the Women Entrepreneurship Strategy. It will be part of all initiatives.
Senator Forest-Niesing: I’m out of time.
The Chair: You will have the floor in the second round.
Senator Moncion: Can we ask supplementary questions while she is here, Mr. Chair?
The Chair: A supplementary from you, Senator Moncion.
Senator Moncion: It might have been asked, but I’d like to take advantage while she’s here.
The Chair: I will accept a supplementary from Senator Moncion.
Senator Moncion: Thank you for your indulgence, Mr. Chair. How many applications did you receive in November 2018 and how many have been approved so far?
Ms. McRae: First, the decisions have not been made yet. The $85 million and $20 million appropriations have not been approved. We are currently in discussion with the ministers regarding project opportunities. We received a tremendous response, especially from women entrepreneurs who want to obtain grants for their projects. We received more than 3,000 applications. We have $20 million to spend. The applications exceed the funding that can be provided. Each project could request up to $100,000. If we multiply, we see that the expenses exceed our ability to fund these projects.
Senator Moncion: Thank you.
[English]
Senator Andreychuk: I have entirely too many questions on the high-speed Internet. We talked about the North, but you’re targeting 900 rural communities. If you don’t connect them, they become remote, and if you don’t connect the remote communities, they become isolated. But I’ve been hearing this story about connection for many years. Where do I go to find out where the plan is? It keeps getting reprofiled and there is the issue of the funding, the provinces involved, the licencing of the broadbands, et cetera.
This is too complex and I will be cut off before I get to the first sentence. I would appreciate receiving the material and the targets and what has been accomplished by the federal government in this field. Now, we say 900. What are the timeframes on that? I don’t think the economy where I live in Saskatchewan can continue, year after year, to be isolated in so many areas when I see connections around the world and I can’t seem to get them there. That’s my harangue today. I’m going to leave that one, and I would appreciate that. I’m sure Senator Klyne will have some questions in that area because it really hits Saskatchewan.
I want to go to this Canada-China Year of Tourism. You’re asking for $3.7 million. I presume that plan was put in after that meeting between the Prime Minister and the Premier. Is that plan the same plan at that time, or have we adjusted for the current situation? And is this on hold because the tourism is very impacted by the foreign policy between the two countries? Is this a wise initiative now? Is it going to be revisited or revamped to take into account the current situation?
Mr. Thompson: Thank you for the question. Of course, despite the current situation that we all know about, China remains a main partner for Canada. There was a little adjustment to the strategy but I wouldn’t say it was a complete shift in the strategy.
The strategy is extending for a number of months. That’s why we had to reprofile the funding. The intent of the funding that we have right now is to conduct activities mostly in China. What we are doing with the $3.7 million is to undertake market readiness initiatives for the tourism industry in China. So the short answer is it’s a continuation. It was one-year funding for the Canada-China Year of Tourism but we have extended the profile and we are continuing those activities, and it should end in the next phase.
Senator Andreychuk: Will this move to another country after, this kind of year of tourism with focus, or was it basically out of the visit and a result of that visit that China was targeted?
Mr. Thompson: This is a very good question. It’s not a question I’m in a position to answer because it would be the decision of ministers to determine.
Senator Andreychuk: It isn’t an ongoing program where you select a country. It was a one-off?
Mr. Thompson: It was a one-off program or micro-initiative we had received funding for, not an ongoing program.
Senator Andreychuk: A one-off. Thank you.
Senator Klyne: Thank you to our panel of witnesses here this evening. Thank you for attending. I have a couple of questions for VIA Rail and then for ISED.
With the fleet renewal on the new line, as those new train sets start to come in in 2022, are you retiring, refurbishing or selling the others that are being replaced?
Ms. Jasmin: Mainly, the new fleet will replace the current fleet we use in the corridor, which is called LRC. The intention is to retire the cars. As soon as we get the new fleet cars, we will be retiring the LRC cars. As for the locomotives, we will reuse those in the long haul corridor, so in eastern and western Canada.
Senator Klyne: So there is no opportunity for economic reuse in another jurisdiction?
Ms. Jasmin: Unfortunately not.
Senator Klyne: I was going to follow up on Senator Forest’s comment about connecting Canada and bringing back VIA Rail through Regina.
The other question is about the new dedicated tracks that are being brought into that corridor, are they also required for the bidirectional new trains? Was that a driving factor as well?
Ms. Jasmin: The 32 trains we are talking about are for the existing service. So the funding —
Senator Klyne: Same corridor, though?
Ms. Jasmin: Correct. So when you talk about HFR, it is going to be new cars, but yes they will be bidirectional, as are the ones we currently have.
Senator Klyne: So if you didn’t do the new dedicated tracks, you couldn’t run the new bidirectional trains on there?
Ms. Jasmin: We can. We use them currently.
Senator Klyne: So it’s just time to replace the tracks?
Ms. Jasmin: Correct.
Senator Klyne: If we could move on to ISED and back to Women Entrepreneurship Strategy, in another committee meeting I picked up that the Canadian Northern Economic Development Agency was given $74,000 to support women-owned and women-led businesses in Northern Canada. I know there was a call for a northern regional development agency but I don’t know if that ever did happen. That was probably five or six years ago. Is there a northern RDA now? I see a nod yes.
That $74,000 seems very small and pales in comparison to the $1.1 million amounts of money, which is already a top-up of monies you have already received for that strategy.
What are the expectations for those funds and how have the disparities and opportunities faced by women living in rural versus urban situations been considered with those?
Mr. Thompson: Thank you for the question. The funding that you are seeing in the supplementary estimates are solely for Innovation, Science and Economic Development. The strategy is also delivered by the regional development agencies. I wouldn’t have the numbers and be in a position to answer for them, but there is a national coordination element to the programs.
Maybe Ms. Mc Rae can help you with the question.
Senator Klyne: I believe the northern RDA was the only one missing in the network of RDAs, was it not?
Ms. McRae: The northern agency does exist and has for some time. It is part of the regional development agency network and it is part of the Women Entrepreneurship Strategy.
Now, of course, the allocation to the various regional development agencies is done based on population and that’s just a standard formula. The $74,000 you are referring to, I believe, is something else other than what was allocated through the Women Entrepreneurship Strategy, because certainly they have much more than that allocated to them. All of the regional development agencies beyond the Women Entrepreneurship Strategy do quite a lot of work with women entrepreneurs. In fact, I have spoken to my colleagues in the northern agency before about women entrepreneurship and, in fact, women in the work force and women in business are very prevalent in the north and they actually work on a daily basis with those organizations.
So they do have money. I think the $74,000 you are referring to is something separate from what they were allocated under the Women Entrepreneurship Strategy in Budget 2018.
The Chair: Mr. Thompson, to follow up on the question of Senator Klyne, can you provide additional information to the clerk on that question of $74,000, plus the budget that is earmarked in what you’re asking us?
Senator Klyne: I have some specific interest in those monies and how they might be getting used for women living in the North, such as Indigenous women.
Ms. McRae: One last thing on diversity is one of the key issues we were looking for in the Women Entrepreneurship Strategy was spelled out in the call for applications. We were looking to support diverse groups of women, so we were very careful around making sure we had special outreach to rural women because we know the situations are quite different. Even for Indigenous women on reserve are very different from Indigenous women living in urban centres and very different from Northern situations. This is one of the key criteria that was spelled out in the application guide. A big part of the decision-making process is to support diverse groups of women.
Senator Klyne: Thank you. I’m sure it wasn’t eight minutes.
The Chair: Six-and-a-half.
Senator Boehm: I’m afraid I could not match the eagerness of my colleagues in catching your attention so most of my questions have been asked.
I did want to follow up on the question asked by Senator Andreychuk about China. It seems to me that tourism numbers from China in most Western countries — and ours is no exception — have really been increasing over the past few years. I would be interested in knowing how you are tracking that and whether the numbers were significantly higher this year, which led to an announcement during the Prime Minister’s visit there, or if you have been able to track whether there has been any dip since the arrest of Meng Wanzhou, the chief financial officer of Huawei.
Mr. Thompson: Thank you very much, senator, for the question. I was afraid it would be a very specific question that I wouldn’t be able to answer. We have to ask our colleague Paul Arvanitidis to join us. He is responsible for the Canada-China Year of Tourism strategy.
The Chair: Could you please identify yourself?
Paul Arvanitidis, Senior Director, Tourism Policy, Innovation, Science and Economic Development Canada: Good evening, senators. My name is Paul Arvanitidis, and I’m the Senior Director of Tourism Policy at Innovation, Science and Economic Development Canada. I have had a key role to play in the Canada-China Year of Tourism and in analyzing our tourism relationship with China writ large.
In 2009, when Canada received official permission from the Government of China to open up their tourism market to Canadian tourism sellers, tourism vendors, we had 160,000 Chinese visiting Canada at that time. As of December 2018, that number has grown to almost 740,000 Chinese tourists last year. That is a number that was just published by Stats Canada a couple of days ago.
China is now Canada’s third-largest tourism source market, and they are in a dogfight for the number two spot with the United Kingdom. The U.K. sent about 790,000 tourists to Canada in 2018, and there is only about a 50,000-person difference between the two countries. We fully expect that, by next year or the year after, China will be Canada’s second-largest tourism source market after the United States, and it will continue to grow at a very healthy rate for many years to come.
In the world today, out of the almost 1.4 billion international tourists, 10 per cent are Chinese nationals, and Chinese nationals are also the biggest spenders in international tourism. It follows that if Canada wants to grow its tourism sector and its tourism revenue, we must fight for our fair share of that very large market.
Two other statistics: In 2017, the growth in Chinese arrivals to Canada was almost 12 per cent, and as of 2018 it’s right around the 10 per cent mark as well. So we’re still getting very healthy growth out of that market.
Senator Boehm: Have you detected a dip?
Mr. Arvanitidis: We have not. Mind you, our numbers are only current to December 2018. But, no, there has been no dip whatsoever.
[Translation]
Senator Moncion: My question is about the five superclusters you mentioned. You pointed out that 450 companies and five superclusters—that’s a surprising word to me—are expected to generate $50 billion in revenue and more than 50,000 jobs. Can you elaborate on those five superclusters?
[English]
Andrea Johnston, Assistant Deputy Minister, Innovation Canada, Innovation, Science and Economic Development Canada: That is the end result that we expect to have. After five years of the program, we expect to have 450 businesses. Three hundred of them would be small and medium-sized businesses, 60 post-secondary institutions, and 180 innovation partners. After we provide up to $950 million, we expect that to be one of the accomplishments of the supercluster strategy.
Senator Moncion: Then I understand. It wasn’t clear. So you will have, let’s say, in post-secondary education, a group of companies or enterprises that will be specializing in education?
Ms. Johnston: Maybe if I step back a bit. There are five supercluster strategies in Canada, or centres. There is one in Atlantic Canada, Ocean Supercluster. In Montreal there’s SCALE.AI, which enables us to use artificial intelligence for supply chain solutions. We have the Advanced Manufacturing Supercluster, or next-generation, which enables manufacturing to move to 4.0 in a much more rapid way. We have the Protein Industries Supercluster in the Prairies, which enables Canada to look at value-added agriculture to feed the world. In British Columbia we have the Digital Technology Supercluster, which enables us to use big data in a way that we haven’t used it, particularly in precision medicine and in the forestry sector.
Those are the clusters we are focusing on in Canada that we think will position Canada from a global strength perspective. Those are five key platform technologies. The end result, what we are expecting, is those numbers in terms of the number of businesses that will be participating in this collaboration, the number of post-secondary institutions and other partners.
Senator Moncion: All right. Thank you.
The Chair: Thank you. Before we adjourn, I have two questions: one for VIA Rail and also for Mr. Thompson.
Mr. Thompson, could you provide, through the clerk, a graph showing the number of Chinese tourists coming to Canada? I’d like to have a graph to show the visitation: the percentage in Atlantic Canada, Quebec, Ontario, Western Canada and B.C., if you could provide that through the clerk.
[Translation]
Mr. Fauteux, if you could provide us with a graph providing us with the percentage of your clients who go to the Atlantic region, Quebec, Ontario, Western Canada and British Columbia, it would be greatly appreciated.
[English]
Honourable senators, this brings us to respecting the clock. I now declare the meeting adjourned.
(The committee adjourned.)