[Recorded by Electronic Apparatus]
Tuesday, May 7, 1996
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[English]
The Chairman: Order, please. Welcome, gentlemen, and members of the committee. Today we are going to be embarking on something new. We will be beginning a study on the issue of rural development and rural Canada and the natural resource sector.
Just for some information for our members, as you might be aware, we are awaiting the arrival of Bill C-23 in committee. Originally it had been hoped that it would have been referred to committee at this time, but the schedule of the House is such that it is not going to be with us for some time.
We have one more meeting on our study of the mining sector. That will take place next Tuesday, when the deputy minister from Environment will be here. We will also be hearing from the Prospectors and Developers Association of Canada. They originally had been scheduled for earlier, but because of problems getting themselves prepared for it, that was put off, and they are doing it also-
The Clerk of the Committee: On May 9.
The Chairman: Thank you.
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So we have a window here. As we had discussed at a steering committee meeting some weeks ago, and reiterated with the steering committee again yesterday, we will begin our review and our study of rural economic development.
I would just take a moment before we begin to make note of the throne speech the Governor General delivered. I want to quote very briefly from it:
- The Government is committed to the economic renewal of rural Canada. The Government will
address the problems facing rural Canadians in a way that is tailored to their needs. Rural
Canada is rich in natural and human resources and faces different challenges than urban areas.
The Government will move forward in the coming session to make sure that all Canadians
benefit from economic prosperity.
First of all, and I think important in terms of both finding it out and letting the rest of Canada know, particularly the part of Canada that lives in the urban areas, we want to find out what the value of that contribution is, what is the value of our natural resource sector. Second, we want to explore policy and other means to enhance that contribution.
We will begin today with witnesses Ray Bollman from Statistics Canada, and Ken Donnelly from Human Resources Development Canada. Both of these gentlemen are here today to try to paint a broad-stroke picture of what rural Canada is. If we are going to be talking about rural Canada,I think it would be a good idea to have some sort of idea of exactly what it is we're focusing on.
I'd like to ask you, Mr. Bollman and Mr. Donnelly, to each give an opening statement. I would ask you not to be overly lengthy with it. I know the members will want to enter into a dialogue with questions. After your presentations we'll go to the committee members for some questions.
Mr. Donnelly.
Mr. Ken Donnelly (Secretary, Interdepartmental Committee on Rural and Remote Canada, Department of Human Resources Development): Thank you, Mr. Chairman. It's a pleasure being here today. I wish you the best of luck as you embark on this particular task and journey.
I'm going to do a bit of a background overview of some of the work that's been going on in terms of the interdepartmental committee on rural and remote Canada. My colleague, Ray Bollman, from Statistics Canada, will actually do some work with you or help explain some of the material in this book, Rural Canada: a Profile, which I think a lot of you should have available to you.
My day job is with Human Resources Development Canada in the sense that I work in the sectoral partnership delivery group. I'm responsible for the primary sectors in that group. I work with national organizations in mining, steel, food processing, environment, fisheries and horticulture to tackle human resource issues on a nationwide basis.
I did bring one copy of what HRDC does on sectoral human resource issues. I can get other copies for the committee.
Because of the work I've been doing over the last 10 years or so with the primary industries, trying to tackle human resource issues across the country, I've become interested in what's happening in rural Canada. The origins of our work really came from a study by Employment and Immigration Canada in the mid-1980s, which singled in on the fate of single-industry towns. After the 1981-82 downturn, a number of single-industry communities in Canada faced crises. Some of them actually shut down.
We had at that time an advisory committee to our minister. That advisory committee decided to tackle some research on what happens to single-industry communities. What flowed out of that was a desire of the associate deputy minister of the time, Nick Mulder, to look at how federal departments could work together to tackle issues concerning rural Canadians.
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The committee at that time had no official blessing from ministers, from deputies, from anybody, but it got started by a number of middle-level bureaucrats who were interested in rural Canadians and how we could work together to help rural Canadians.
It took us quite a while to get a mandate that didn't impinge on the policy portfolios of the various departments, and we basically focused on three general things.
The first was consultation and networking amongst federal departments, provincial departments, rural organizations, and rural people.
The second dealt with information sharing. We put out a number of papers over the last four or five years that focused on rural issues, such as manufacturing, primary sectors, and agriculture, and their impact on such things as the trade issues of this sort. We did that in partnership with academics and rural research groups.
We also embarked on a number of public exchanges, or a bringing of information. Ray and I, and some of our colleagues, have gone far across this country to participate in conferences and workshops with rural Canadians to talk about rural issues. We focused on places such as Corner Brook; Coaticook, Quebec; Gimli - we're going to Gimli in the fall; Goderich, Ontario; and Grande Prairie, Alberta. I think there's a session starting this week in Quesnel, British Columbia.
We figure it's important to talk to rural Canadians in rural Canada, and we try to use those sites as a sounding board for some of the issues and concerns we've had as federal civil servants in our departments trying to tackle rural issues.
About four or five years ago, in our research work we realized that a number of federal departments, independent of each other, were looking at indicators of what was happening in rural Canada. Indian and Northern Affairs was doing some work on how to measure economic development in northern Indian communities. Health and Welfare was coming at it from a database on what makes up a healthy community. Our department at the time, Employment and Immigration, was wrestling with how best to shape the focus of community futures, which was our main-line, rural development programming. A number of other departments were trying to figure out how best to do this.
The interdepartmental committee took it upon itself to say, rather than all of us hiring consultants, why don't we work together on this and see how best we can do it? So the rural indicators work became very much a joint project.
The focus of our discussion was that if you had an opportunity to brief the Prime Minister for an hour, what would you tell him or her about rural Canada? It did change over the period of time when we designed this thing.
So it was trying to get a package of messages that would paint a broad-brush picture of what the critical issues are, of the main things that were happening in rural Canada.
It was fortuitous that the OECD in Paris was also realizing that rural issues were becoming a key aspect of their agenda in many of the countries in the OECD. In fact, in the early 1990s OECD set up a rural development secretariat and started to look at some rural issues. On their first agenda were rural indicators: how do you measure what's happening in rural parts of OECD countries?
So our two projects have been working in parallel and in tandem and have helped each other out. We realized that the rural indicators were important because we needed a set of data that was non-biased and impartial and would help people explain or understand what's happening.Rural Canada: a Profile was an attempt to do that.
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We also realized that when you talk about rural Canada you have quite a dilemma of what you're actually trying to talk about. I think I'll let Ray explain the geography and how we got to that in his presentation.
What we did try to do, using the OECD framework, was to look at four big boxes of issues. They were population and migration, economic structure and performance, social factors, and environmental factors. The OECD project lent itself quite nicely to the first: population and migration, and the economic structure. Work has not been as smooth on the social side and has been extraordinarily difficult on the environmental side.
Our project was then to come up with a package of indicators. We've come up with14 indicators that try to tell you a little about the critical issues facing rural Canada. We have three indicators that we titled ``work in progress''. That was the best we could do around environmental issues. It basically is a snapshot in time.
Before I flip it over to Ray to go through some of the key messages in the indicators, we have found that this particular document has been going out the door fairly steadily. It has been used by a number of groups; for example, church organizations have used it as a primer. Interestingly enough, its biggest client group, which we never thought of on initial design, is university students. Usually first-year university students are getting this text as part of their required reading. I think it's helped us in that sense.
I will stop there and flip it to Ray. He will hit you with some of the main messages in the package, and then we'll go to questions.
The Chairman: Thank you very much, Mr. Donnelly.
Mr. Ray Bollman (Research Economist, Statistics Canada): As Ken indicated, we have information for a one-hour briefing, so I am sure the chairman will wave diligently when he wants me to stop.
There are a few observations in your handout, in your package. There are three themes I'm going to try to keep touching on as I go through some of the data.
It seems to me that each indicator shows that rural Canada is at a socio-economic disadvantage. There are another 17 or 20 indicators in the book, and generally they all have the same type of conclusion: there's a socio-economic disadvantage in rural Canada.
With respect to the agenda of this committee, in terms of primary sector, resource sectors,I think the observation is that employment in the primary sector is relatively small and is generally declining. In terms of shipments, value added, and contribution to foreign exchange, there certainly is a significant contribution. The averages up here mass considerable diversity. One indicator of diversity is that within rural areas there are some rural regions growing as fast as or faster than non-rural regions, or urban regions.
Let me keep that aside. I'll come back to it to conclude.
Let me start with my view of the two economic facts basic to understanding rural society. One is the ongoing increasing value of human time. T.W. Schultz got a Nobel prize a few years ago, and his major contribution was an article on the increasing value of human time. He says the one constant over the long history of the world is the increasing value of human time, with the result that there's always the incentive to substitute capital for labour. Most primary or natural resources sectors are capital intensive, and getting more and more capital intensive.
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An anecdotal observation is that 10 or 15 years ago there were 2,000 people below ground at Thompson. Now there are 400 below ground, and output has doubled. That's the employment scenario.
Another observation is that there is a decreasing real price for resource commodities, but regardless of what's down here, it's the increasing value of human time that's causing the substitution of capital for labour and decreasing employment in the primary sectors.
With Ken, a group of us have put together some rural indicators with the interdepartmental committee. Why rural indicators? It's to baseline the discussion for rural - it's not necessarily for people or sectors - territory. It's to baseline territorial policy discussions.
To define rural regions, OECD suggested looking at all the communities within a region and defining a rural community as an area with fewer than 150 people per square kilometre. Those are the rural communities. Then we define a rural region as any region in which more than 50% of the people live in rural communities.
So we'll be looking at rural regions as having more than 50% of the people in rural communities. Intermediate regions have less than 50%, which are basically small-city census divisions. Agglomerated regions are big-city census regions.
The first question is: how many people live in rural Canada? In 1991, 33% of all Canadians lived in the rural census divisions, which are the rural regions with more than 50% of their population in rural communities. So there's a slight decrease in share between 1981 and 1991, but there's still a substantial portion of rural people in Canada.
The census divisions beside cities have in the order of 14% or 15% in rural census divisions, while those not beside cities have the same share. About 3% live in the rural north.
In terms of how we rank among OECD countries, we're about in the middle. There are countries like Belgium, Germany and Italy with smaller shares of their total population in rural regions, while Austria, Greece, Finland, Sweden, Norway have larger shares of their populations in rural regions.
Where is the population growing? Between 1981 and 1991, the biggest percentage growth was in census divisions with smaller cities. There was substantial growth in census divisions with big cities. There was small growth in rural areas overall, at 5.7% over 10 years. Rural areas beside cities grew more. Rural areas not beside cities grew less. The rural north grew a wee bit in percentage terms. This includes births, subtracting deaths, and all the mobility in and out.
If we just look at the mobility in and out, the chart looks a bit different. There was substantial migration into big-city census divisions, some smaller migration into small-city census divisions, but overall, people left by voting with their feet.
In rural areas beside cities into which people moved, most of this rural decline was in rural areas not beside cities or it was in the rural north. The population was growing here, but the migration component of population was that people were moving out. There's wide diversity across Canada.
Before moving away from the demography of rural Canada, I will put up this one chart to make the point about the increasing share of aboriginal populations in some provinces.
This is Saskatchewan, 1991, rural and urban all together. The observation here is that if you consider those more than 65 years of age in Saskatchewan, 2% to 3%, one in fifty people, are aboriginals. If you're 15 to 24 years of age, 14%, one in seven people are aboriginals. If you're under 15 years of age in Saskatchewan, almost 20%, not quite one in five, more than one in six are aboriginal people.
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So the share of aboriginals in Saskatchewan - it's the same graphics for Manitoba, and the same shape as in the other provinces but much lower - there's an increasing share of aboriginals in the younger population. Therefore there'll be an increasing share of aboriginals in the total population.
That's important, because if you look at the change in all these socio-economic indicators for aboriginals over 10 years, there's no change. They're not increasing in absolute terms. They're not increasing relative to other Canadians.
One of the socio-economic indicators that suggests rural Canada is disadvantaged is the level of unemployment. The area that's pink is 1991. When you go from big cities to medium-sized cities to rural areas, there's higher unemployment. Within rural areas beside cities and those not beside cities in the north, unemployment rates are higher when you move away from cities.
This graph shows that historically - look at the green levels - unemployment rates are always higher in rural areas than the red lines, showing unemployment rates in urban areas. The other thing is that when there's no recession, unemployment rates are much lower in urban areas. When you're in a recession, unemployment rates in urban areas get as big as non-metropolitan or rural areas.
In that recession, it's the same thing back here. In fact, one of these red lines is above the green line. Both in the U.S. and Canada, urban unemployment rates got to be higher than rural unemployment rates for the first time in recent statistical memory.
There are lots of graphs here on the role of the primary sector and resource sectors in employment. This graph compares us to the OECD. In this one, we're looking at the share in farming, forestry, fishing, hunting and trapping. It's not mines and oil, just to be comparable to the OECD.
Canada has 11% of the employment in rural regions in the primary sector. So if you're in a rural region in Canada, 11% of the workers are on farms, working in the woods or fishing. There are a few more percentage points, which we'll get to, in mining. But you can see that we're sort of in the middle of OECD countries. Some are lower. Ireland, Spain, Portugal, Iceland have a higher share in the primary sector.
So maybe to understand where the primary sector fits, I should look at the sectors in rural Canada where one finds the employment. The biggest one is services. The next biggest one is wholesale and retail trade. The next biggest one is manufacturing: the third-biggest sector in rural Canada is the manufacturing sector. The next one down here is agriculture, working on farms. Moving down here, the next one is transportation and communication. The next one is construction. The next one is government. The next one is fishing plus forestry plus mining and oil. In rural Canada, about 150,000 are employed in those three sectors. ``Other primary'' is what I would call that, in addition to agriculture. At the bottom here is finance, insurance and real estate.
This graph is to make the point, which you probably all know, that the business services sector is the fastest-growing sector. In fact, if you're in big cities, small cities, rural beside cities, rural not beside cities, whatever, all these green dots are saying that no matter what region you're in, business services is growing at the fastest rate. The next fastest one here is health services. The next one is consumer services. Previously, I had lumped all services together, and it was going through the top.
Within services, the three top-drawing ones are business services - this means people who sell services to businesses - health services and consumer services, such as getting your hair cut.
So rural is participating in the growth of business services. The problem is they're not a big base there. If you go from big cities to small cities to rural and beside cities to not beside cities in the north, there's not a big change in the share of employment in retail and wholesale trade and distributive services.
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Going across here, there's not a big change in the share of personal services. There's not a big change in the share of social services, except in the north.
But here you go from big-city census divisions to small-city census divisions to the rural. There's a dramatic change there in the share of employment and the growing business service sector, here called producer services, or selling services to producers.
Rural is trying to grow from a very small base. You can go from beside cities to not beside cities to the north, and the base declines also. So there's just a very small base from which to build in the expanding business services sector.
In the primary sectors, as you'd expect, agriculture is significant: 9% of the employment is in overall and rural; 9% in rural beside cities; and 9% or 10% in rural not beside cities. When you get into the north you get 9% of the employment in the mining and oil extraction sector.
If we look at mining alone, in Canada overall it's about 9%. North of the Atlantic - our classification is Labrador - 14% are working in mining. In the northern census divisions in Quebec, 6% or 7% are in mining. Ontario was 7% or 8%, and 21% in the north of the prairies are working in mining.
In the Atlantic in the north, or Labrador, 8% are working in fishing. In the Atlantic provinces' census divisions not beside cities, 4% are working in fishing. Overall in the Atlantic, 3% are in fishing.
In forestry, the tallest one here is B.C. In the north census divisions of B.C., 7% are in forestry. The next biggest one in B.C. is the census division not beside big cities, or 5%. In B.C. as a whole,4% of the employment is in forestry.
In terms of agriculture, the tallest one here is in the prairies. In census divisions not beside cities, 25% are working in agriculture, working on farms.
So there's no census division in Canada where more than 50% are working in farming. It's hard to find them at 40%. Grouping these prairie census divisions together away from the cities you get 25% of their employment in agriculture, and 19% in the census divisions beside cities.
There is another chart in your handout. There are some census divisions here that, on average, have about 20% of their dependence on mining and oil. Another in the prairies...about 25% of their dependence on agriculture. A very few have about 10% dependence on agriculture. Then you get less than 10% dependence on the various resource sectors. I'm sorry you can't see that one.
An issue in the primary sector is then looking downstream to the value added. This is just ranking all industries top to bottom in terms of the rural share of employment. So fishing and trapping have nearly 75% of their workers in the rural area. Agriculture would have 70% in rural areas and so on. The first manufacturing one we see here is wood manufacturing, such as sawmills. About 50% of wood manufacturing is in rural areas. Food manufacturing, including fish plants...38% to 40% and so on. So you can see the declining share here. This graph is saying how intensive they are.
The next graph has the same ranking. The size over here shows you how important they are. This one has a fairly high ranking, quarry and sandpits, but with very few people working there.
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Looking at the processing of primary resource sectors compared with all the manufacturing, what we've done here is to update a publication of Statistics Canada where they put together the U.S. market and the Canadian market, took out all the imports and exports into Canada and the U.S., and asked what is the share Canada has of the total Canada-plus-U.S. market? In 1983-85 it was 7%; 1986-88, a small increase; 1989-91, maybe 7.5%; and for manufacturing as a whole in the 1992-94 period, Canada's market share of the Canada-plus-U.S. market fell below where it was in the 1980s.
The biggest one here, as we said before, is wood industries. The manufacturing sector with the most rural-intensive employment is wood industries, with the same pattern of increase in the North American market share in the 1980s and a substantial drop-off in the early 1990s.
Manufactured food products has the same pattern - pulp and paper, paper and allied products: increase in the early 1980s, fall-off in the late 1980s and a substantial fall-off in share in the early 1990s. In primary metals there was an increase, and a decline, again, in the early 1990s.
So this is looking at, if you will, the competitiveness of adding value after the people who have been working in the woods and have been working on the farms and have been working in the mines and have been catching the fish.... So here's fish processing, wood processing, and paper and metal processing.
In terms of diversity, I'll show you two or three observations. This one is to continue that theme, that there's social disadvantage in rural Canada, average incomes are lower when you move from big cities to small cities to rural, and the incomes are lowest in rural census divisions not adjacent to metro areas.
You can see more diversity if you make a map. So we broke census divisions into two groups: is your income higher than average or lower than average, and are you growing more than average or growing less than average? So if you start above average and grow, you're ahead and gaining. If you start below average and you're growing less than average, you're behind and losing.
So here we have 104 census divisions between 1981 and 1991 that were ahead and winning, and 122 behind and falling back. I have a nice coloured map you can't see, so let me show this to you in black and white.
The census divisions that were ahead and gaining seem to be in the greater Toronto area, anything south of Algonquin Park. All of these are white: ahead and gaining. These, behind and falling further behind, are, it seems to me, as soon as you get outside of Montreal, right through to the Gaspé, northern New Brunswick, both ends of Nova Scotia and all around the outside of Newfoundland. These black ones are behind and falling behind. If you go out west, the behind and falling behind are, in Saskatchewan, outside of the Regina census division, and all of Manitoba outside of the greater Winnipeg area.
Another measure of the diversity out there is the observation that, on average, rural has a socio-economic disadvantage. In what I call rural Canada, incomes are below average and falling behind, but if you look at 1981 to 1991, and rank census divisions by how rural they are, you find there's a wide variability in their rate of growth. Here it has 0% rural, so these are cities with growth between 0% and 50% or 60%, and rural growth of of minus 10% to 40%. There's considerable diversity in the growth of census divisions, regardless of their degree of rurality.
So that looks relatively flat. We know that on average it looks a bit like that, because we've seen the averages. But the fantastic diversity here means that being rural does not constrain you or force you or label you as slow growth. That is one place I would like to end.
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The other place I would like to end is with this map I put on your table. If I put the colour chart up, you can see it. This is another way of looking at the diversity of rural Canada. The yellow is big cities. The light green is labelled as the native north. The urban frontier is generally census divisions with fairly big cities, much like the biggest cities - growing populations, growing incomes, professional people living there and moving in.
Rural nirvana is this area south of Algonquin Park. People are moving in - high incomes, a well-educated workforce. They have rural development problems that rural Saskatchewan would love to have.
The agri-rural area is outside the big city census divisions, on the prairies and basically eastern Quebec. The rural enclave starts at the tip of the Gaspé, northern New Brunswick, the ends of Nova Scotia. Newfoundland's rural enclave has lots of young people. They're not moving out. There are high unemployment rates, low incomes and low education levels.
The resource areas have mining and forestry, or in the capital cities in the north they have lots of professionals, professional resources who are mining in natural resources.
Let me just wrap up. I'll go back to where I started. I think that on average each indicator shows that rural Canada has a disadvantage. Employment in the primary sectors appears to be relatively small and is generally declining. These overall averages mask diversity. There's a wide variability in growth rates, and this map suggests there's a wide variability across census divisions of the type of milieu in rural Canada. Thank you, Mr. Chairman.
The Chairman: Thank you very much. That was a very interesting presentation. A number of pieces of information that I wasn't totally familiar with were brought forward.
I think members would like to ask a few questions. We'll start with Mr. Deshaies.
[Translation]
Mr. Deshaies (Abitibi): My question is for Mr. Donnelly. After seeing the long list of diagrams with enormous amounts of statistics, it seems to me that the interdepartmental committee is certainly trying to study the real situation of rural people and find solutions.
I'm sure that a rural area such as my own, the Abitibi region, would be grey or green on your maps. Have the departments already used these statistics to find solutions or to try to find solutions?
[English]
Mr. Donnelly: It's an excellent question. Basically we are a group. This interdepartmental committee is basically there to provide information. We have not functioned in the past as a policy base or to provide guidance to our deputy or our ministers on rural issues, primarily because the questions have never focused on that particular light.
A group of us are trying to look at what we've notionally called the new rural economy, which builds from the best of the past in the sense of looking at the strengths of the economy in many of the natural resources industries, and looks at the future job-creation and self-sustaining exercises or activities that rural Canadians can pursue using technology, small business, entrepreneurship - anything and everything we can find to do that.
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So we are just embarking on what I would call the new rural economy study group, trying to find, as you say, some solutions we could offer in an ever-changing economy. But it has primarily been a research-gathering body to this point.
[Translation]
Mr. Deshaies: Thank you.
There are all sorts of statistics out there that merely confirm what people living in rural regions already know. In our part of the world, the natural resources sector has increased a great deal. There are as many mines as in the past, if not more. the value of ore has increased, as has the value of lumber. But the reality is that fewer jobs are being created.
Both the mining industry and the forestry industry are doing well, but there aren't any jobs for our young people who would like to remain in our region.
I realize that your group provides information. You aren't the ones who make policy. However, it may be tempting to use your statistics to make policy and to say that the government should do this or that.
Nothing specific has yet been done with these statistics, but are the departments trying to use your data to create policies that are better suited to rural regions?
[English]
Mr. Donnelly: When we started off with this particular project, the primary underlying feeling was that most Canadians didn't quite understand what rural Canada was. The term brought up different connotations to various people. Some people saw it as a pastoral place where one went for a picnic out of the city. Other people saw it as the woodland, the wood operation and a variety of other things. The document was really an attempt to give some sense to all Canadians of what we could document or statistically point out was happening to parts of Canada.
When we wrote this we were trying to get it in a language, style or format so that almost any Canadian could pick it up and get a sense of what was happening. If you look at the project, we have written it in such a way that there are text, graphs, big-picture messages and what have you.
The challenge that you pose, sir, is what to do with the information. We really were pleased to come today because we've been looking for any format we can find to share the information. AsI said earlier, we've shared it with rural Canadians in different sites and locations. We've shared it through OECD with a number of countries, and Canada has been complimented by a number of countries that have said this is something that they should be doing, this kind of overview, this picture of what's happening in their own countries.
As for specific policies flowing from this research work, I cannot really articulate any specific policy measures.
I'm changing hats here and going back to my day job. I work with a number of human resource sector councils in fish harvesting, seafood processing, food, mining, steel, the environmental industries and horticulture. We've been actively trying to design programming to use the private sector for young Canadians through our sectoral youth internship project. We've been working with aboriginal groups and handicapped groups in those sectors, particularly in horticulture and others, to try to do that.
That is based on two realities: the sectors I work in are primarily resource-based sectors, and we are trying to create jobs in those sectors for rural Canadians and for rural young Canadians. So there is some linkage, but it's not formal.
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[Translation]
Mr. Deshaies: Thank you. These statistics will certainly be very useful as we look for long-term and middle-term solutions. I don't have any other questions for now; I think I have quite a few statistics to digest. I'll have other questions that I'll ask at some other meetings.
[English]
The Chairman: Thank you. Mr. Thalheimer.
Mr. Thalheimer (Timmins - Chapleau): When you talk about rural Canada and urban Canada, you basically have all of Canada with the exception of a few big cities, and the rest is rural, isn't it? We have about five or six...but the bulk of the population is-
Mr. Donnelly: You're correct. I don't know exactly the percentage; I think it's 97% or 98% of Canada geographically that is rural.
Mr. Thalheimer: When we look at economic renewal of rural Canada, what solution are we looking for? There's obviously a decreasing population. The rural areas, of course, are very capital intensive and the new technology is taking away the manpower, if you like. What should we be looking forward to - to using those technologies to the maximum so that we can draw the best economies out of rural Canada? Or are we trying to get population back into it? What should we be looking at here?
I'll give you an example. I was born out west and I'm very familiar with the prairies, but for the last 30 years I've been in Timmins, Ontario. We're basically mining and forestry there. But rural Canada, for what we have, is not as large as out in the west, Saskatchewan, Alberta and Manitoba. When we see little industries.... I can think of Fraserdale. There was a hydroelectric plant there. About 80-some families were taken out of there because all of that can now be done from Timmins or Toronto. It could be done from here. The technology has taken over. We don't need those 87 people in that little Fraserdale any more. The community is wiped out; it's gone.
We're using the technologies of today to replace the communities. So when we look at economic renewal, we're not trying to get populations back out there, are we? We're trying to use technology to its maximum.
Mr. Donnelly: This is my own personal opinion. I'm not speaking for HRDC here, but I think it boils down to about three things.
One is not necessarily getting people to move. People are moving back to parts of rural Canada and I think the map shows you, but they tend to be either of two sets of circumstances: those who are moving a commuting distance - the Almontes, the Wakefields, the Richmonds of the world - and/or those who are progressively moving to retirement communities such as Muskoka or Comox or Saint-Jovite. They have a lifestyle and an income that allow them to live in a rural setting almost from a retirement or quasi-retirement perspective.
The renewal aspect is that Canada's resource extraction industries, whether they're farming, mining or oil and gas, are first-rate. They do an excellent job. The trouble is that as technology moves along, they need fewer and fewer people to produce at increasing levels of productivity. The technology issue is really a two-edged sword.
Industry Canada has a community access project and this committee may wish to ask for a witness to come forward. We've been spending $6 million or $7 million to put Internet access into rural communities. The goal is to hook up 1,000 rural communities electronically, and 300 or more are visibly doing that.
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We have to ask ourselves what they are going to do with the technology once they get it. I think this is really an interesting phenomenon. In the work with the OECD, the question of rural distance is a debatable one. Does distance really matter any more? You will find people arguing yes, it still matters, and others arguing no, if you are part of the world electronic network, it really doesn't, depending on what you're doing.
Ray's charts and the things we've pointed out show that the real growth in the Canadian economy is the service industry and continues to be the service industry. So you have service industries such as tourism that offer potential, but they certainly don't offer potential everywhere.
I know that's a bit of a convoluted answer, but it's a mixture of doing what we do very well in the resource-based primary industries and adding to those new industries that can function and work in rural settings. Really the bottom line - and this is my HRDC hat coming down - is that rural renewal starts and ends with people. It boils down to people making a choice on where to live and giving them the tools and the wherewithal to make a sustainable livelihood for themselves and their children. That's probably what a lot of it has to boil down to.
Mr. Thalheimer: When you talk of renewal, service industries require people. It's people oriented. How many haircuts are you going to do in a town that has 200 people? If you're talking about service industry in the rural area, I don't see much potential there. There's nothing I can see unless you get that population back.
With technologies and so on, we can develop better mines, better agriculture, and so on. Fewer and fewer people use the technology that's available.
I was born in Saskatchewan, and in those days when you had four quarters of land you had a lot of land. Well, today a farmer who has four quarters of land is just not around any more. You need five sections of land because of the technology we have. So you have that one farmer now replacing eight. The technologies are there and we have to use them.
I don't see the service industry going out there, but I see the technological material and equipment we now have to go out there and get the real economy started in rural Canada.
Mr. Donnelly: There are three things that come to mind. Rural manufacturing is not dead. It's changing, but it's not dead. For the back end of service industries, the paperwork doesn't have to be done in Toronto; it can be done electronically anywhere. So the back end of offices of a lot of service industries could function in rural areas. We're hoping that by linking all these rural communities, more and more private sector companies will look at rural sites.
It's no surprise that the major investments by Japanese automakers have been in rural settings in Ontario. There are an awful lot of advantages that rural sites offer.
This is again my own personal analysis, but I've noticed that rural infrastructure.... Roads matter. Especially for manufacturing, it seems that most rural communities that are on major trucking routes do reasonably well. The farther you go from the trucking route, the less likely it is that you're going to attract or maintain manufacturing or service operations.
Again, the mixture with tourism I still think offers potential, not for all parts of rural Canada but certainly for some parts of rural Canada.
The Chairman: Thank you, Mr. Thalheimer. Mr. Wood.
Mr. Wood (Nipissing): Mr. Donnelly and Mr. Bollman, if we were sitting here waiting for the federal government to do something, we'd be here a hell of a long time. What we have to do, I believe, and what we've done in my area, is get off our butts and do it ourselves, whether it's guys like me, other members of Parliament, or whatever.
I'll give you a good example of what we've done in our area. This is just a comment, and I don't know whether afterwards it will lead to a question or not. In North Bay, Mattawa, and this area, through Human Resources Development we have gotten access to about $50,000 or $75,000 - I could be wrong here - through an IAS committee. The communities have come on board and put in in-kind contributions.
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We've brought the environmentalists together. We've brought the business sector together. We've brought various councils together, sat down, and gone over how to make sure that these smaller communities in my riding maintain their sustainability. Out of all that we've come away with Tembec, Mr. Dottori, and everybody else making a $10 million contribution to a small community like Mattawa for value-added products. Can you imagine what this does to a smaller community of 2,500 people?
I must say that Human Resources did put in money, but you have to get the major players of a community together. Out of this we've put a video together and we've held appreciation days for forestry, because that's what it happens to be in. An educational facility for younger people is going to be developed at Samuel de Champlain Park. Again, all of this can be done through initiatives with a little help from Human Resources, but also by bringing the communities together, getting people who are really interested in it, and bringing business sectors on.
I think that is really the way to go. As you know, to try to pull off something like this in smaller communities.... First of all, the initiatives in a lot of cases aren't there. There's less access to capital. Governments are not getting involved the way they used to.
When you're doing all this, are you taking this into consideration? You mentioned that rural renewal starts with people, but how do we do this? How do we get into this stuff? Do we do it the way we're doing it, or are we going down the wrong road? What's your view of this? What would you say to the Prime Minister about rural Canada if you had half an hour?
Mr. Donnelly: I still would like that challenge some day, even if it's hypothetical.
Mr. Wood: I know, I know, it's a great challenge. I wonder what you would say.
Mr. Donnelly: You've pointed out that a lot of it really boils down to communities and people using the resources and the wherewithal that are there. I think the federal government's best tools may be threefold.
One is information. Certainly if there's one thing I've seen over and over again it's the multitude of packages of information on a variety of topics that federal departments can produce. Second is facilitation - you mentioned the IAS committee - a process I'm very familiar with. Regrettably, I think we're losing the capacity because of budget cuts to do that kind of facilitation work.
Putting together communities and planning.... I was involved in a recent conference, a community economic development conference in Brockville, where a lot of it came from. It was a collection of mayors, federal bureaucrats, provincial bureaucrats, councilmen, everybody pitching in to ask what we are going to do about eastern Ontario, outside of Ottawa, about how we are going to survive.
I think a little bit of money helps, but it's the thing I would rank third - federal dollars helping communities. It's the front end of getting the people motivated with a package that makes a lot of sense.
Currently, I'm involved in some research work on community economic development on three fronts. I'm quite willing to give this work to the committee once it's done. One is work being done internally at HRD on best practices of ``partnershipping'' at the community level, looking at how federal or our department in this case can work with local community organizations to tackle human resource issues with a community-wide perspective.
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I'm also working with the Conference Board of Canada to try to survey private sector companies to see what their views and concerns are around community economic development and what approaches private sector firms are prepared to take in the sense of investment in the communities they operate in.
The third piece is with the Canadian Labour Force Development Board, and that's working with community organizations on what they feel they can bring to the equation of economic development in the communities they operate in.
I'm going to try to bring all of this together and see what comes out of it.
To summarize, it's working with the resources that each community has and it boils down to people and what their priorities are.
Mr. Wood: What their priorities are -
Mr. Bollman: I can't talk on behalf of my agency either. Statistics Canada is obviously arm's length from lots of things, but as for the question of what I would tell the Prime Minister, I might go back to what I read in 1992 in an article in the Canadian Journal of Agricultural Economics. I think the analysis went like this: mega-projects seem to be out - well, there's a gap here - so that must mean micro-projects are in.
Well, if micro-projects are in, who does them? You'd think somebody in each community should do it because they know their community the best, but as a central agency of federal government, do you say to the person in each community that's their problem, we know they have the solution because we know micro-projects are in? Do you tell them to solve their own problems? If it's them versus us, that's pretty easy; yes, they should solve their own problems. But if we are all one community, we should be solving our problems by assisting the micro-regions with their development or putting some seed funding in. There are all sorts of not very expensive strategies to help micro-regions, micro-committees, micro-actors, micro-projects get going.
In this context then, there are a couple of responses to other things. Various people are asking about the solution. Ken and I have been sitting in on some of the meetings of this new rural economy study group, and I think one of the things we hear from listening to these academics talk is the observation that over time - maybe it's already here - there's a fairly dramatic shift from globalized.... We have two things going on at the same time: simultaneous globalization and localization.
Two things are happening. The world's becoming more global and more local. We know what's happening on the other side of the world. We're selling to and buying from the other side of the world, and at the same time our local communities are getting more and more important to our lifestyles, partly because there are fewer transfers coming from elsewhere and partly because the environment's getting more and more important. The quality of your environment is often determined on a very localized basis. It also now is what's the quality of your high school, and what's the quality of your hockey team. It's all locally determined if you're not getting these subsidies coming in.
In terms of a solution, I think the solutions are probably fairly local - coming from these people talking about simultaneous globalization and localization.
The next point is your observation on technology. They brought in new technology. We didn't need buggy whips any more, but the new technology helped us invent something else. So the old rural communities are perhaps being devastated with the new technologies. There are no bank tellers, just bank machines out there, but it should help us do something else.
Now, I don't think I have all the ideas for that, and you're right in that you need people out there to cut hair, so the types of services we're looking for out there are exportable services. Rita MacNeil moved her whole production company to Cape Breton. There's an exportable service of entertainment.
There's a woman in Foxwarren, Manitoba, who retired and set up an editing shop. She was an editor in Winnipeg, but now she's in Foxwarren, Manitoba, editing papers, newspapers, and flyers and printing them out of her shop. She's exporting the publishing and editing services out of Foxwarren, Manitoba.
Trucking is important. You and I were at a plant someplace between Saint-Clément and Trois-Pistoles. I forget the name of the plant. The truck arrived every morning at 8:30 and was taking aluminum castings right into the U.S. So you can do it from very small communities, but you have to get the truck there, I agree. There probably was a paved road in there.
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In terms of solutions as localization, and the one that tends to be in terms of its exportable services, tourism is an exportable service. You're bringing money in from outside. People usually come with it, but....
The Chairman: Mrs. Cowling.
Mrs. Cowling (Dauphin - Swan River): Thank you.
I have a couple of questions. You mentioned earlier in your presentation about the OECD, and Paris setting up a rural development secretariat. I'm wondering if you could share with us how that is working for them, what their objectives are and where they're going.
My other question is with respect to the myths that seem to be out there about rural Canada, myths that frighten me, myths that are coming to people in rural Canada from an environmental perspective. How do we get around those particular myths?
I come from rural Canada. I know how important rural Canada is. I guess the question I raise is, how do we in fact promote the resource sectors of rural Canada and what they in fact do for urban Canadians? Because without rural Canada, much of this country would fall flat on its face. How do we, as a committee, encourage the Prime Minister to say this is worthwhile, this is something we should be doing?
Mr. Bollman: If I answer the first one, will you answer the second one?
Mr. Donnelly: I wanted the first one. It's the easiest.
Mr. Bollman: The OECD has a rural development program that is small in the basket of things. There are 700 to 800 people working in OECD. I think there are two person-years of allotment... and five people are working on rural development.
It's difficult in lots of places in the world to talk about rural development in a cross-sectorial, cross-cutting point of view. It's equally difficult within OECD to not have the thing hidden in the agriculture directorate. So from their point of view, it's great. They are in a cross-cutting position and in a territorial development service. They're not within the agricultural directorate. Their research is supporting the job study and the ongoing employment policy - and specifically rural employment policy - of the OECD. They are leading, in terms of collecting of data, what we've done here on rural indicators.
The OECD project on rural indicators was the first data in OECD at a subnational level. If you want an OECD number for Canada, percentage of people with more than grade nine education, or less than grade nine education, they'd want one number. Fertilizer per acre: one number from Canada is what they'd want.
We're coming in with, in the rural indicators project, more differentiation of what's happening across parts of the country. They have a project on amenities. From their point of view, amenities are the non-market value, the public-good value of both the natural environment and the built environment. A lot of countries outside of Europe are not putting a lot of emphasis into that.
In the long run, that may be more important in many countries - maybe in Canada, too - in terms of the desire to preserve rural Canada. People want to see it, they want to visit it, they want to live there, that sort of thing. So the amenity value may be improving.
I think that's a quick summary of what's happening with OECD in Paris. They're trying to promote cross-sectorial, cross-administrative and up and down and vertical and horizontal approaches to stimulating rural economies.
Mrs. Cowling: Thank you.
Mr. Donnelly: Turning to your second question, I think there are probably three or four messages that seem to.... In my own mind, the fate of rural Canada is intertwined with the fate of urban Canada. The two really can't be totally separated.
I think the three or four messages that seem to be predominant is that the engines of growth and production in the primary sector are world class. That message seems to get lost. The average urbanite probably doesn't really understand or have a good sense of how important those shipments of grain, those shipments of wood cabinets, those shipments of fish sticks and everything else really are to Canada's balance of trade. It kind of gets lost in a variety of other issues.
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The second thing is the lifestyle many rural Canadians have and that has attracted a lot of people to retirement communities and cottage communities. I think the fact that the small towns that exist and that people have chosen to live there.... They like the lifestyle, like the fact that the churches are vibrant churches and people go to them. The hockey team exists and plays the neighbourhood team. There's a cultural aspect of rural life that isn't really getting projected as well as perhaps it should.
I think fundamentally there is a lot of interest in everyday and all Canadians, urban and rural, maintaining the quality of the environment they've taken - the lakes, the rivers, the water, the fact that you can go to a park and enjoy it, go canoeing, do a variety of things. That seems to be taken for granted by most of us. I think those messages need to be shared in urban Canada, right across the country.
The Chairman: Thank you. I have a couple of quick questions before a couple of members come back with some of their questions.
I just want to clarify a point made earlier with Mr. Thalheimer. If I understand it correctly, in real terms the number of people who live in rural Canada has gone up, but as a percentage of the overall Canadian population it has gone down. There actually are more people in rural Canada today than there were 10 years go, but as a total percentage of the population it's declined.
Mr. Bollman: As long as you balance out people moving out of rural Saskatchewan and into all the counties well north of Toronto, then on average, yes, it's going up - but it's going like this.
The Chairman: Or to put it another way, in the most remote areas there's been an absolute decline in population, but that's been offset by the near-urban areas.
Mr. Bollman: Yes, exactly.
The Chairman: I wanted to just explore something else for a second. You were talking about services. I was looking at the chart. Generally speaking, you were saying across the line, rural Canada's percentage of service industries is more or less the same as it is in urban Canada, with one exception - producer services. I'd like you to explain to me exactly what a producer service is. Perhaps I wasn't listening well enough, but I didn't pick up exactly what a producer service is. I'd also like your comments as to why that variance exists.
Mr. Donnelly: I'll have a crack at it, and he's going to add to it.
A primary example is that if you're running a pulp and paper company or a small sawmill or whatever and you want to buy your advertising, most advertising companies tend to be based in an urban setting. So a producer service would be an advertising service.
If you're a fairly large company, where do you get your accounting done? Is it done in a head office in Toronto, which does all the accounting for all the plants and therefore hires the big accounting firm, or is it done by a local accounting firm? The same with legal services. Those are high value-added types of jobs that tend not to be there.
Ray has a nice little list of what a business service is.
Mr. Bollman: Yes. Business services are, as Ken was saying: advertising, lawyers, accounting, employment agencies, all the computer-type development, computer programming, software development, accounting, bookkeeping, advertising and doing all the advertising, doing the annual reports, a lot of scientific and technical work, all the consultants selling to companies, all the lawyers and notaries on the service selling to the company - it could be lawyers working within the company, but these are their own companies selling services to the company - management consulting and anybody else selling to business.
Why is it in urban centres? Because they sell to head office. One of the last studies the Economic Council did observed that in round numbers, 50% of the business services were in Toronto, and the other 50% seemed to be split between Calgary and Montreal. So they had a couple of paragraphs worrying about the impact on regions, how regions can compete.
Well, there are a couple of things. Keep your head office in your region. As well, you have to find the biggest city or town in your region and build on that, because business services tend to go to centres where there are head office types of functions.
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The Chairman: Making Sudbury a service centre for northern Ontario would be an example of what you're talking about.
But again, to build on what Peter said, would not technology give us an opportunity in rural Canada to address the problem of us not having producer services in rural Canada? I think there are a lot of things that ten years ago would have had to be done in Toronto in terms of producer services that technology would allow us to do directly in rural Canada.
Mr. Bollman: Yes, and I'm not sure why it's not happening.
There's the observation of the woman in Foxwarren who is dealing with people in Winnipeg. It's a long drive to get to Winnipeg. I guess I would do it in a day. So she's competing, but not many people are doing that because you want to show up face to face. Do you like this ad? So for two or three days, you can work at home. The next day, I want to put it on your desk. Do you like this ad? It's hard to see your reaction over the telephone, you know, when you go like this. Yes, I guess it's okay.
There are a lot of articles on that, and I can't find the answer, so I should stop mumbling.
The Chairman: Obviously that's something for us to consider.
It's 12:20 p.m. I have to adjourn the meeting at 12:30 p.m. I know there are two quick questions. Mr. Reed, you had a question.
Mr. Reed (Halton - Peel): Mr. Chairman, my apologies for being late. I had to speak in the House this morning. I just got out of there.
Mrs. Cowling touched on the whole question of the urban mythology about rural Canada. That's one area I'm concerned about, with which we've got to wrestle to overcome. We're three generations now away from an agrarian society. The urban children who live even within a mile of a farm still think that milk comes in rectangular cardboard containers.
This is a serious difficulty. What happens is that policies made by provincial governments are really made with a recognition of where the majority of the votes lie. They lie in urban Canada. So when a policy is being constructed for forestry management and so on, very often in Ontario, the people who live south of Highway 401 get to dictate the policy that gets to be applied in northern Ontario. This is a real problem we have to get over.
The other thing I've got to mention was just touched on. It's about business services not being available in rural Canada as much as they should be. I would suggest that part of it is the weakness so far in our communications system. We don't have telephone lines even in Ontario that allow farmers to be on the Internet at this point. There are areas of Ontario where they're precluded from operating with the latest in technology.
Mr. Donnelly: The technology is really a question mark. It's like a two-edged sword. It can offer all sorts of opportunities for rural communities to pick up a niche on doing all the software on some particular agricultural-related product.
We're talking about some of the issues. If you could use technology to link it to your strong resource-based type of thing, whether it's mining-related, forestry-related or tourism-related, and build on what you have there, then it has real potential. How it will bring in business from outside is tough.
Linking up these rural communities is really something for which I have to commend Industry Canada. It's taking on this challenge. The one thing that I think is interesting about this challenge is that these rural communities we were talking about earlier are deciding how best to use the technology.
The other side of the sword - we can't really forget it - is that it may be easier with communications. Rather than using the local small-business operator to purchase a service or a good, you may get on there and order it directly from the manufacturing site, which could be anywhere in the world today, and have it shipped to you.
I'm not saying it's the answer to everything, but it's one with which we'll have to wrestle.
The Chairman: Mr. Thalheimer, your last question. We have four minutes.
Mr. Thalheimer: I've always thought of rural Canada as optimizing its resources in that community. You get the maximum you can out of them.
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It seems to me today that what we're looking at with the new technologies.... You mentioned Rita MacNeil as an example, and the Foxwarren.... We've got the technology today. I can think of another one, Lotto Ontario, which started down on Bay Street. Technologies make that available. We can do that in Sault Ste. Marie. We could do it here. We could do it in Moosonee. With the technology we have today, we could run Lotto Ontario as efficiently there.
What I am saying is this. Instead of just concentrating on the resources that are available in that particular area, we should also be concentrating on how to renew the rural communities and get the service industries there, because we have the technologies available to put the people and the resources there. Technology has the resources to conduct the business in rural Canada. You don't have to be on Bay Street any more.
Mr. Bollman: My attempt to tie this together.... Mrs. Cowling said to look at the resources.I say perhaps that the major resource is the people.
Mr. Thalheimer: Right.
Mr. Bollman: Then picking up on my localization theme or this amenity theme, if you have a nice community, you can do anything from anywhere.
Mr. Thalheimer: Right.
Mr. Bollman: But will Lotto Ontario move to the town I came from? No. Nobody from Lotto Ontario is going to move to the town I came from. But if it was a nice town, they might. So if you have a nice town and your localization effect or the amenity effect of your local area is nice and good, whatever people want, there's a chance you can get that type of mobility.
Mr. Thalheimer: So our business should be to get those types of things there. Then if I get one, two and three, I get a nice community. If I get so many Lotto Ontarios there, I can build a nicer community. That's what we should be concentrating on. Is that what your thinking is?
Mr. Bollman: That's my guess.
The Chairman: Mr. Donnelly, would you like to comment?
Mr. Donnelly: Just to quickly wrap up, as I said to the chairman just before we started this session, the interdepartmental committee on rural and remote Canada, through many members and whatever, is still quite willing and able whenever possible to provide some additional assistance, research, or anything you want to help you in your task.
I want to make sure that some of the key messages that.... Nine out of ten people in rural Canada don't farm. They have nothing to do with agriculture. That can't be ignored, along with part of the statistics here.
The other thing, as Ray pointed out about the OECD, is that there are parts of rural Canada that are doing very well. Those stories aren't getting told either. I think it's unfair that it all gets painted with this black brush that life in rural Canada is not there.
I wish you the best of luck on your work and efforts. I hope we've been helpful to you today. We'll be as helpful as we can in the future.
The Chairman: Thank you very much, Mr. Bollman and Mr. Donnelly. You have presented some very important information to us as a committee as we begin our study on this particular topic. I think you've helped us define some of the parameters and the scope, some of the work we need to do. We appreciate your presentation and your offer for additional assistance.
Thank you very much, committee members. We stand adjourned until Thursday at 11 a.m.