EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 5, 1996

.0805

[English]

The Chairman: I'd like to call the meeting to order and welcome everybody. The Standing Committee on Natural Resources is continuing its study today on the issue of rural development. We're pleased to be in Edmunston, New Brunswick, and we're pleased that we're having an opportunity to continue our tour across the country to obtain local input on the issues relating to rural development.

We're pleased to have as our first witness today, from the Madawaska Forests Products Marketing Board, Claude Pelletier.

Welcome, Mr. Pelletier. We'd ask you to make an opening statement, and then we'll turn it over to the committee members for questions.

[Translation]

Mr. Claude Pelletier (Manager, Madawaska Forest Products Marketing Board): My presentation is entitled "Management of Private Woodlots in Northwestern New Brunswick".

The management of private woodlots in northwestern New Brunswick is not a recent development. Initially, all the farmers in the region also produced wood because their woodlots were an integral part of their farm. This situation hasn't changed very much. Although we have become more specialized in a particular sector of agriculture, we have always given great importance to forestry.

Historically, the private woodlot owner saw this natural resource which he kept in reserve as a safeguard, since, if necessary, he could sell it for cash at any time in the year. Today, the situation has changed somewhat and we produce far more with a view to harvesting what we can from the forest. That is why wood-lot owners in the area covered by the Madawaska Forest Products Marketing Board, which comprises Madawaska County and the civil district of Drummond, Victoria County, are more involved in the management of their woodlot.

Here, in the northwest, the Madawaska Forest Products Marketing Board has always promoted good forestry management practices since it was established, in June 1962. This producers' organization was set up to market forestry products under legislation giving it certain powers which, when exercised, become binding on all producers concerned.

At the present time, we have adequate markets for all our forest products, except for pulp quality hardwoods. However, fortunately we have very close by sawmills and a pulp and paper plant, Fraser Paper Inc., located right in the middle of our area.

As I said earlier, the Madawaska Forest Products Marketing Board advocates good forestry practices for all private woodlot owners. In this area, we have a large membership, although the number has dropped a little since 1995 when the federal government withdrew from the federal-provincial forestry agreement, after having been involved in it for just over 10 years.

.0810

I know that all levels of government are trying to save in every possible way, but sometimes a distinction has to be made between an expenditure and an investment.

Here, in New Brunswick, we have seven marketing plans which have been very efficient in delivering these forestry programs. In 1994, the last year of the federal-provincial agreement, for every $1 spent in the field, we were given $0.85 plus administration costs.

In 1995, the federal government withdrew and the province is now administering the program alone. The assistance currently given to us is as follows: for every $1 spent in the field, we are given $0.80 without administration costs. However, we are allowed to keep 20% of that $0.80 to administer the program.

In 1996, for every $1 of cost in the field, we were given $0.65 without administration costs and we were still allowed to retain 20% of that $0.65 to administer the program.

The result of this is that we no longer have a waiting list of people wanting to take part in the program, and only those farmers who are particularly well-off can now afford to take part in this type of forestry management program for private woodlots. We do not believe that this is the best way of encouraging rural economic development.

The solution: In order to correct the problem and promote rural economic development, we believe that the New Brunswick Department of Natural Resources and Energy must stop its policy of selling off lots of Crown land to the highest bidder, because this policy encourages clear-cutting.

Rather, the department in question should have its staff, who are located in the five districts across the province, draw up a management plan for these Crown woodlots, and then ask teams of local loggers to do the cutting in accordance with the pre-established management plan and pay royalties to the province.

One other way of ensuring rural economic development is to guarantee the continuity of silvicultural programs on private woodlots. It is estimated that there are 41,000 private woodlot owners holding 30.5% of the forest area of New Brunswick. Furthermore, it should be noted that private woodlot owners supply 25% of forestry products handled by the wood processing industry.

Investing in the future: If we do not invest in our natural resources, our future is doomed to failure. When our forest resources are exhausted, our industries will have to close down, and then it will be a complete waste of time for our governments, both federal and provincial, to talk about job creation.

At the provincial level, we have seven plans for marketing forest products, thus representing all the private woodlot owners in New Brunswick. Our primary objective is to promote, control and regulate the marketing of forest products coming from different areas; to encourage our owners to produce and market higher quality forest products; to promote good woodlot management practices; to co-operate with all local or provincial agencies, both in New Brunswick and outside, with a view to regulating the marketing of forest products.

In the past, we were the body which delivered silviculture programs resulting from federal-provincial agreements. That is why we have today a very strong team which can deliver this type of forest management program for private woodlots, and invest very effectively in the province some $5 million every year.

.0815

For a politician, a period of four or ten years is a very long time. In the forestry sector, however, it's a waste of money to set up a program and then drop it 10 years later. So what can be done to find the money needed and thus contribute to rural economic development?

In answering this, we would say that in our province we have the appropriate vehicle for recovering, providing and investing that $5 million a year in New Brunswick's private woodlots.

The whole system could work as follows: royalties on Crown lands should be increased accordingly in order to obtain the $5 million; that money should then be directed to the seven marketing offices, which already have the staff in place to deliver a silvicultural program of this size for private woodlots.

This approach is simple and guarantees that a forest management program will continue on a permanent basis.

Who should contribute to this $5 million?

First, the private woodlot owner should not be expected to contribute more than 15% since, in addition to using his land for forestry, he supervises it, maintains an adequate road system, helps to create jobs and continues to pay land taxes on property from which he personally will never see the benefits.

Second, industry must contribute its fair share because they are the people who are really benefiting from this.

Third, the government, both federal and provincial, must also contribute, because it is they who have established a system for collecting individual income tax and all the other taxes which may result from such a program.

In concluding this presentation, I would strongly ask your committee to look objectively at our recommendation which, to some degree, will help to safeguard our natural resources while contributing to economic and rural development.

Thank you, members of the Standing Committee on Natural Resources, for this opportunity to express the views of our woodlot owners.

[English]

The Chairman: Thank you very much, Mr. Pelletier.

Mr. Deshaies.

[Translation]

Mr. Deshaies (Abitibi): Good morning, Mr. Pelletier. I am not a specialist in forestry, and I'm particularly not in forest management. After 10 years of work, how would you assess the results of the Eastern Management Plan in your area?

Mr. C. Pelletier: After 10 years, we are just beginning to see them. Here, in northwestern New Brunswick, we have managed to reforest old areas no longer used for growing, at an average rate of 800,000 to one million seedlings a year.

Mr. Deshaies: That's not very much.

Mr. C. Pelletier: It's not very much for our small area, but if you take -

Mr. Deshaies: Only for your area.

Mr. C. Pelletier: Only for our area, but not for the whole of New Brunswick.

Mr. Deshaies: Only for your area; not New Brunswick as a whole.

Mr. C. Pelletier: Not for the province as a whole, no.

Mr. Deshaies: Can you give us figures?

Mr. C. Pelletier: On the basis of the Eastern Plan, we know why reforestation is done for the province as a whole. It is to ensure that there is sustained production, taking into account harvesting and management plans.

Mr. Deshaies: After 10 years, is the situation worse than it was with past forestry policy, under which people could cut without being concerned about the future? Over the past 10 years, have you been able to remedy previous mistakes or do you feel that you've only done one-third or one-half of what you wanted to achieve?

.0820

Mr. C. Pelletier: As I said earlier, in forestry a period of 10 years is so short that you can hardly see any results. In forestry, you have to talk in terms of 30 to 35 years. You plant trees and 35 years later you can begin to carry out selective cutting. Even then, you still do not have any wood which you can market.

Mr. Deshaies: In Quebec, there is a new policy. In my riding, Abitibi, we have tried an experiment. Scattered municipal lots are offered for silviculture plans. Have you tried the same thing in New Brunswick? Do you have more wood coming from private lots than is the case in Quebec? In Quebec, there are very few private producers.

Mr. C. Pelletier: In the province, we have about 80,000 private woodlots belonging to small owners. To give you an idea of just how small the lots are in the territory which I serve, there are approximately 2,200 small private woodlot owners in the civil district of Drummond, which is in Madawaska County.

Of these 2,200 small owners, just over 1,500 have only 50 acres of land or less. Therefore, for these people this resource is not their sole source of income, but it is a way of life in our area. People cut one, two or tree loads of wood a year. The money is usually used to pay for children going to school or to pay taxes. This is an integral part of their income.

We recommended to our young people that, instead of exhausting our resources, they should register their woodlots in management programs. They would then be able to obtain perhaps the equivalent of a load of wood and, in so doing, improve their woodlot.

Mr. Deshaies: In terms of the value of the wood, have you calculated how much that $5 million would represent? Would it mean a tax of 5% or 10% for the industry?

Mr. C. Pelletier: It would not be a tax -

Mr. Deshaies: But indirectly?

Mr. C. Pelletier: - but that mechanism would provide a certain guarantee. In New Brunswick, that could amount to about $40 million. Therefore, 12% of $40 million would be about $5 million. But the industry would not have to pay the 12%. This is, rather, the mechanism which would guarantee the program, and subsequently the owner's share should not exceed 15%, because that involves many other things.

Mr. Deshaies: Where would the other 85% come from?

Mr. C. Pelletier: Part would come from industry, because industry is the primary beneficiary here, and part would come from both levels of government, because it is they who collect the taxes, levies, etc.

Mr. Deshaies: How would industry pay that money?

Mr. C. Pelletier: Through royalties on Crown lands. That is already being done.

Mr. Deshaies: You say that in the silvicultural industry, a load of wood brings between $3 000 and $4 000, and that money helps to pay to send a child to school. You also say that 50 acres of land are cultivated in such a way as to ensure that there is still wood in 50 years. For someone who owns those 50 acres, how much more would a load of wood bring him? Would that amount to one third or 50% of his annual income?

Mr. C. Pelletier: That varies considerably. It would be difficult to give an exact figure, because the typical woodlot owner may also have a corner store and drive a school bus, while also producing between 40 and 50 cords of wood a year. That would be a typical example in the region.

[English]

The Chairman: Thank you, Mr. Deshaies.

Just before continuing our questions, I'd like to recognize that Pierrette Ringuette-Maltais has arrived. She is the local member of Parliament and our host here today.

Mrs. Ringuette-Maltais (Madawaska - Victoria): Thank you, Mr. Chairman. I would like to give a very official welcome to your committee to Madawaska - Victoria. I think you are now probably in the best part of Canada.

I'm sorry I'm late this morning, but I was caught by Radio-Canada, CBC, and you don't get away from them very easily.

.0825

Mr. Pelletier has a great credibility and knowledge of the basic economics of our area.

After Mr. Pelletier has completed his comments, perhaps I could give you a rough summary of our economics, where we should be going and how this committee can support us in our endeavours.

Thank you.

The Chairman: Thank you, Pierrette. We'll continue our questioning and then we'll have an opportunity perhaps for you to provide us with some testimony.

Mr. Ringma.

[Translation]

Mr. Ringma (Nanaimo - Cowichan): I wonder where the comparisons can be made with Europe, whether we can learn anything at all from their experience. I wonder if you could compare the situation there.

Mr. C. Pelletier: It's very difficult. In 1968, I spent a month with private woodlot owners in Scandinavian countries, Finland and especially Sweden. You cannot compare the attitude of people in Scandinavian countries with that of people in New Brunswick.

In 1968, I saw that, in terms of knowledge of his woodlot and forestry, a private woodlot owner was at the level of one of the best forestry engineers in New Brunswick. You just cannot compare them.

We're talking about regions where private woodlots have been managed methodically for a hundred years. They cut the tree when it has reached maturity, that's a precise point. That may be an ideal we should seek to achieve, but I do not think it can be done over-night. It takes time to adapt to that.

Mr. Ringma: We're trying to determine the real role of the federal government in this industry. I have the impression that if we were to let the private woodlot owners do what they want, they could certainly make a profit.

You've made suggestions. In your view, what is the specific role of the federal government compared with that of the provincial?

Mr. C. Pelletier: When I talk about government, I include both levels.

Mr. Ringma: I'm trying, if possible, to distinguish between the two roles.

Mr. C. Pelletier: I consider that it was in a moment of panic that federal-provincial agreements were concluded establishing forestry programs. During that period, the industry forecast that there would not be enough coniferous wood, softwood, to meet the shortfall expected in the 21st century.

.0830

Therefore, a program was established strictly to promote the growth of softwood. This was the reason behind the two successive federal-provincial agreements, each lasting five years. I think that there was a one-year gap between the end of the first agreement and the beginning of the second.

After 10 years of this program, it could be seen that technology was changing. Trees of that size were not necessarily needed because technology had changed considerably. It was considered that we could go into the 21st century without any problems. Therefore, the program was stopped.

I will give you an example of how I see the situation. Suppose I want to build a $100,000 house. I am eager to have it and, with $20,000 in my pocket I begin construction. However, after spending the $20,000, which is all the money I had, I realize that I should never have started. It's a waste of money.

That is to some degree how I see the situation.

[English]

The Chairman: Thank you.

Mr. Reed.

Mr. Reed (Halton - Peel): Thank you very much, Mr. Chairman.

Mr. Pelletier, you have alluded to the problem of clear-cutting. In the United States there is a great deal of privately held forest lands, some of which is held by very large corporations. One of the advantages they have is that they are allowed to include the forest inventory on their balance sheet; that is, if they have a plantation of five, ten or twenty years old. It's allowed to be given a value and it shows up on the balance sheet.

Two things happen. One is that the incentive to regenerate the forest is very real, because it appears as a financial advantage to the company. The other other is, of course, that the value is still there; whether the harvest takes place or whether it does not, it's still recognized as having a value.

I wondered if such a thing would be important to private woodlot owners here.

Mr. C. Pelletier: I don't know if I understand your question. Here, for instance, it's different. We're not complaining about the amount of taxes we pay on our woodlots. On the other hand - I'll use this example - if you put insurance on your house, they take the value of the house itself, not of its contents, right?

Private woodlots in the United States are owned by townships. It's completely different here in New Brunswick. Maybe we have something to learn from them. I don't know.

.0835

What I had in mind is when the government is selling, by tender, pieces of crown land, the amount of money involved is so high for a woodlot that the one who gets it has no choice but to clear-cut everything in order to get his money back. That's wrong.

On the other hand, I think what the government should do if they want to get rid of some pieces of crown land is ask for a management plan on it, done by their own people, and then invite woodcutters from the area to cut in accordance with the management plan. I think that would be better.

I'm not pointing fingers at anybody, because I have found as a rule of thumb that when you point fingers at somebody, you have three other fingers pointing back at you.

Mr. Reed: This problem of the temptation to clear-cut is common across Canada. I know in Ontario the same experience has taken place. From my perspective, I was trying to see if there were new ways or innovative ways that could enter into the picture that would be a disincentive to clear-cut. In other words, you own the property and the trees have value, but they could be declared to have value on the stump as well as processed.

Mr. C. Pelletier: In some cases, clear-cutting will be a prescription in a management plan. I'm sure you've heard of the problem we had here in New Brunswick two years ago with the blowdown at Christmas Mountain. That forest had been cut maybe 20 or 25 years ago. Most of it was overmature fir, and everybody was expecting something to happen - a blowdown, budworm or fire.

Mr. Reed: Thank you for that. It helps to clarify at least what you're facing here.

The Chairman: Mrs. Cowling.

Mrs. Cowling (Dauphin - Swan River): Thank you, Mr. Chairman.

For the record, I think it was August 20 when Doug Young, the then Minister of Human Resources Development, provided, through the transitional jobs fund I believe, $6 million, which was matched by the province for a total of $12 million over a period of three years to private woodlot owners for silviculture programs.

I am wondering, Mr. Pelletier, if you would comment to the committee on how that has helped you through your transitional time and how it's helped you and your silviculture programs in the area.

Mr. C. Pelletier: Pierrette is laughing and I don't know why.

The intention was good. Money was sent to the province and it was up to the province to administer that $6 million, at $2 million per year for a period of three years.

In terms of the program in place at the present time, as I mentioned in my report, back in 1994, when the federal-provincial forestry agreement was put in place, for a job that cost $1 in the field, we were getting 85¢ plus administration to administer the program.

.0840

In 1995, the provincial government put $3 million in, with no participation from the federal government. They said that for the next five years - . In 1995, for what was costing $1 in the field, the provincial government was providing us with 80¢ and no administration. But they said, you can take 20% of that 80¢ for your administration. In 1996, it was down to 65¢. So we were after the federal government to kick in a little bit of money in order to raise that bag to at least 80%, 85%. When the feds kicked that money in, instead of raising it to 80% or 85%, the provincial government is using that money to continue the program at 65%. They claim that the more 65¢ dollars you can spend, the more you will undertake reforestation, improvement, and so on.

This year, for instance, instead of helping the small woodlot owner, the people working in the office are looking after the biggest ones, lawyers and doctors who own woodlots, who don't need that money. Maybe their woodlot needs to be tended or it needs to have seedlings put in, but they aren't really the kind of people we want to get to. We used to have in the past a list of names for a year in advance and now they say, no, we can't afford it; it's too costly.

But I hope something can be done between now and next year.

Mrs. Cowling: So the intention of the dollars flowing has helped you through that transition somewhat.

Mr. C. Pelletier: Yes. Any little bit of money helps, but it can get us down the drain too if there's not enough.

As I mentioned, if you want to build a $100,000 house and you only have $20,000, and you're so anxious to get that house that you start building it anyway and you stop at $20,000, it's a waste of money.

Mrs. Cowling: Okay.

The Chairman: Mr. Pelletier, if I understand you correctly - and I am many things, but I am certainly not a forestry expert - if private woodlot owners do not get sufficient money into the silviculture program, you're suggesting that they'll simply give up on their lots, take whatever's there, cash it in, and that will be the end of the industry in the future. Is that essentially what you're saying?

Mr. C. Pelletier: Yes.

The Chairman: In our immediate area here in New Brunswick, how many woodlot owners would there be?

Mr. C. Pelletier: In New Brunswick?

The Chairman: Yes, private woodlot owners.

Mr. C. Pelletier: Forty-one thousand woodlot owners.

The Chairman: These would be individuals who would be getting either all or, more usually, just a part of their income through their woodlot. Usually, they're doing something else as well.

Mr. C. Pelletier: In my area here, for 90% it's a part of their annual income.

The Chairman: I wonder if you've done any calculation of what the secondary job impact is of the existence of the private woodlot owners. How many indirect jobs does that support through sawmills or whatever? Do you have any figures?

Mr. C. Pelletier: I don't have those figures with me, but somebody had the figure on the provincial - . I don't know if you had seen the code of practice for private woodlot owners. Have you seen this?

The Chairman: No.

.0845

Mr. C. Pelletier: There's a lot of information in it that might answer your questions.

The Chairman: Thank you. I understand we have a witness this afternoon who might have additional information. Andrew Clark is going to be here, so perhaps I'll ask that question of him as well.

In essence you're saying that a large part of the success of rural New Brunswick is the operation of private woodlots in a healthy manner and that, without that, there's going to be a significant loss of income and a significant loss of economic activity in New Brunswick.

Mr. C. Pelletier: Speaking for this area, we used to put on the market - . We were negotiating with local industry something in the vicinity of 55,000 to 60,000 cords of softwood. That was 10 or 15 years ago, mostly during the period from 1980 to 1985 when we had severe budworm damage.

After having put that severe budworm-damaged wood on the market, we sat back and asked, as a marketing board, what we have at the back door to continue to offer on the market. We have come to the conclusion that it would be to our advantage to try to put on the market more than 35,000 cords. We were putting a bit more than the annual growth, and what we're trying to do is manage our private forests and to market at least our annual growth. By doing some thinning and silvicultural work, we will get that quarter to half a cord an acre of growth, three quarters of a cord an acre of growth, or even up to a cord an acre of growth. It's possible by doing some silvicultural work and thinning.

So I think it's good money well invested, and if we can get as many others as possible doing it, down the road they'll see the difference. Maybe at one point in time they'll do it on their own.

I spoke to someone who had a woodlot and a five-year plantation on it. I said that's worth something. The owner looked at me and said that it was worth nothing. It was worth something to somebody, but it was worth nothing to him. He said he was nearly 60 years old, and if he wanted to sell or buy, he would prefer to buy a lot where there's mixed wood, because he could generate a bit of wood to help him pay for the lot. He said if he had the plantation - it's not going to be beneficial to him until 50 years down the road, and he will have to support it and pay tax on it. It's a cost to him. It opened my eyes on a new way of thinking. He was right.

The Chairman: Mrs. Cowling, you had another question.

Mrs. Cowling: This is just to follow up. As this committee studies the renewal of rural Canada and the economic viability and sustainability of creating a climate for jobs and growth - . When I look 30 to 35 years ahead to see the end product of the private woodlot - . I'm wondering whether you have considered through your time of transition - because we're in a change of doing things in this country - the value-added component of the private woodlot and where you may go in that direction.

Mr. C. Pelletier: Yes, but we're limited. I'll give you a good example.

Some industries would like to see market price for our product attached to their selling price, which in some cases I oppose, because we're talking about two completely different markets.

.0850

As a producer, if I'm generating a bit of pulp on my woodlot, I have one place to sell it: Fraser Inc. I'm not on the world market. I don't have the opportunity to load it on the tracks and sell it in the States. That's not appropriate. We're talking about two different markets.

We prefer to have a stable price throughout the year than to have prices going up and down. In some cases, some of our own woodlot owners or - I hate to say wood contractor - wood cutters sometimes buy stumpage. They want to buy their neighbour's stumpage, but the price is so high they just can't afford it. Last year the price of stud wood suddenly went up by $160 per cord, so the guy went to his next-door neighbour and said he could now pay the price. Before he started cutting it, the price went down to $120 in two months. What did he do? He tried to get his money back. He went and cut everything. So it's not a good policy.

The Chairman: Thank you very much, Mr. Pelletier. We appreciate your taking the time to provide the testimony and to educate the committee on some of the specific challenges you're facing as a private woodlot owner. We very much appreciate it.

Mr. C. Pelletier: Thank you very much, too, for listening to what I have to say. I don't have all of the solutions, but I hope this can be part of it.

The Chairman: We thank you for making the suggestions.

Before we go on to our next witness, I'm going to ask Pierrette to say a few words.

Mrs. Ringuette-Maltais: Thank you very much. I hope I can limit myself to a few words, because I have a lot to say. I hope you're not going to go.

The Chairman: I've often wished in the House that I'd have the opportunity to cut you off.

Mrs. Ringuette-Maltais: I guess this committee has to look at the seriousness of the responsibilities of natural resources in regard to the province and to the federal government.

I was part of a committee similar to this for the Province of New Brunswick in 1989, when we toured the province, met with all the marketing boards, and did quite an extensive investigation and research. Marketing boards for New Brunswick for small woodlot owners are the only solution we can apply, so we can provide a minimum level of service and they feel they have the ownership.

As Claude said earlier, there's still a lot of education to be done with the private woodlot owners and with the forestry sector at large in the border communities - and probably in the Campbellton area it's the same. We import a lot of wood from Quebec and from the United States in order to have our manufacturing industry stay afloat. Therefore, there is a very important need for federal participation. If we have to look at the survival and the prosperity of rural Canada, it starts with the basic economies - what we call the six sisters - and forestry is a vital part of it.

.0855

Claude and Marlene earlier mentioned the transitional funds. It is our wish to increase the level of job creation in the forestry sector because in rural Canada - rural New Brunswick - it's a means to an end for jobs. Unfortunately, the marketing boards are the creators of the legislation of New Brunswick, and they have an agreement. I and some of my provincial colleagues have written to the provincial minister, asking him to review the agreement with the marketing boards in order to create the jobs that are needed immediately and in the future.

Bob, I saw your interest when Claude said money is not the answer to all things. But you need to start to educate the private woodlot owners that what he or she does on their woodlot creates jobs now, but most importantly, makes sure jobs are there in the future. Certainly, we would welcome a diversified and value-added product.

I admit that up to now New Brunswickers have been extremely shy of what they could produce, and how they could market it within and outside - . For instance, when I look at the venture capital funds that we have in Canada, private and public, New Brunswickers do not take even 1% of that venture capital. For me that expresses, in addition to the shyness we have with regard to markets, another segment where I hope that federally - . Because of the provinces not wanting the federal government to be involved in the basic economy of rural Canada - and a lot of rural Quebec has the same reality we have - the potential export markets we have for those basic economies are gone. On our own, New Brunswick cannot do it. Whether we look at the forestry sector, agriculture or mining, we cannot do it on our own.

I've been in Ottawa for three years and now I see the potential the federation offers to the provinces with regard to contacts and exports. I was a provincial member here for six years and I thought we were doing great, but we were not. I hope one of this committee's recommendations is to maintain federal participation, standards and marketing in forestry, agriculture, mining, etc. We can't do those on our own. New Brunswick cannot do it, Ontario cannot do it, Quebec cannot do it, and B.C. cannot do it.

.0900

That's the only way we will be able to survive and maybe prosper. I think Team Canada has proved that we're a trading nation, and that's where we need to put all of our efforts and energy. Rural Canada will only survive if we can at least maintain the federal presence in those six economic sectors. For New Brunswick, forestry, agriculture and mining are vital to our survival and our prosperity.

I believe that in this Canadian family, if one member needs a boost, then all the family members will witness the prosperity. Maybe I've said enough for now.

Mr. Chair, thank you for listening.

I have one other comment. Clear-cutting was a necessity in New Brunswick because of the budworm, but it's no longer a necessity and has to be eliminated. I think Claude and all the members on his marketing board agree with that. Sometimes we have to wake up and see the light that the status quo is not necessarily the right way to do things, and I think Bob has a lot of issues in his riding with regard to clear-cutting. I think that's something we have to eliminate. A forest is not a field. You cannot see it the same way.

The Chairman: Thank you, Pierrette. Are you going to be able to stay with us for a little while?

Mrs. Ringuette-Maltais: I'll have to leave at 11 a.m. because some of my colleagues won't be in the House today for a lot of important votes, so the colleagues who are not on committees have to be in the House to support those votes. I'll be leaving at 11 a.m. to catch the noon flight for Ottawa, and I'll be thinking of you when I cast my vote.

The Chairman: We appreciate you being here.

I'd like to call on our next witness, John Higham from Mount Allison University.

I'm going to ask Mr. Reed to take the chair for a minute while I slip out for a second.

The Acting Chairman (Mr. Reed): Mr. Higham, we look forward to your opening statement. I'm sure you're familiar with the routine. After your statement we'll open it up to questions from committee members, so proceed at your pleasure.

Mr. John Higham (Director, Rural and Small Town Programme, Mount Allison University): Thank you very much. I appreciate the opportunity to address this group. Welcome to New Brunswick. You heard that you were in the best part of the country, but you're also in the most rural part of the country. I think that's important to get, and that's why the Rural and Small Town Programme is located here.

Earlier I sent some information on the program itself. Have you had an opportunity to see that material to see what the program's perspective is?

.0905

The Acting Chairman (Mr. Reed): No.

Mr. Higham: Perhaps I will take two minutes.

The rural and small town research and studies program, as the name implies, is focused on rural and small towns in Canada. We were established in 1984 under a federal research grant at Mount Allison University. Since that time there's been a gradual change from an early focus on housing and planning issues in rural Canada to one reflecting the complex environment in which rural and small towns now operate.

The original research grant was withdrawn about a year ago in response to some changes at CMHC. We now operate under a different kind of funding structure. We seek our own funds, we have altered our scope, we've created a range of associates across the country, and we try to put together groups of people to deal with the types of issues that are being faced in rural and small town Canada now. In particular, we focus on people in communities helping themselves. The aim of our research is to find ways to leave individuals with the tools or abilities to handle the issues, ideally so that we can spread that through other rural and small towns.

That gives you some perspective on my presentation today. I'm going to bring that perspective to the presentation, and I trust it will be somewhat different from what you've heard. I also think our perspective will lead to what we believe is a different role for the federal government in rural Canada, and we're going to characterize that as enablement. I'll get down to what we see as the structure of that, but in essence that's what I'd like to talk about.

I don't think this group needs convincing that rural is important, although many people do. This group understands that Canadians identify very strongly with rural Canada - it's part of our culture, part of our identity. That said, there is no real consensus on what is rural in Canada. We operate under a rule of thumb that any settlement under 10,000 people is considered to be a small town or rural community.

From that perspective, up to 25% of this country lives in those types of settlements. That's not an insignificant part of the country. It varies dramatically in the region. We've noted that you're now in the most rural area. In New Brunswick roughly 53% live in rural and small town areas. It is a similar percentage in Nova Scotia and Newfoundland, but higher in P.E.I. This is the heart of that kind of rural and small town. Surprisingly, one of the most urban provinces under that criterion is Alberta.

That reflects one of our basic critiques of existing rural policy, which is that we often seek and devise solutions in an urban setting or a more urban setting and then transfer those solutions to rural Canada, and I think that causes difficulties. Second, not enough attention has been paid to the uniqueness of rural and small town Canada, and that has led to a variety of assumptions that have driven decision-making over the last few years.

To us, rural is people, and people live in rural communities. The long-term sustainability of rural Canada is going to be highly dependent on the viability of those communities. Those communities are complex and facing unique sets of challenges, as you recognize in your work plan. We believe that our approach of looking to help people help themselves is the best method of ensuring the long-term viability of these communities.

There is a legitimate and substantive role for the federal government in that perspective, but we think we must recognize some of those criticisms I just articulated about urban subsuming rural and the lack of attention to some of the rural uniqueness.

To add to the brief that I've presented, here is a snapshot of some of the complex issues facing these small settlements. Not to belabour the point, but these communities are facing the same globalization pressures that everyone else is. They are attempting to link into global economies at the same time the urban areas are, but they're also feeling the brunt of major domestic restructuring of the public governance environment - not just government services, but a whole variety of questions about non-profit, the role of academics, etc. This combination of globalization forces and this changing domestic environment is causing a whole range of challenges.

.0910

To give you a quick idea, the shift in employment is dramatic. There's an article in today's Telegraph-Journal that you may want to pick up. It's about the challenges of Atlantic Canada. It's a full-page article on the future of the Atlantic economy, and it says the employment shift will lead to fewer than 7% of jobs in Atlantic Canada being primary-based by the year 2005. Less than 7% will be in the traditional resource sectors of this part of the country, despite the fact that the majority of people live in rural and small town areas. So there's a huge employment shift to be dealt with.

There's a large growth in micro-businesses and home-based businesses, which I will get back to at some point.

You all are well aware of the dramatic drop in transfer payments for local governments. There are real questions of modern infrastructure, both the normal questions we've always had to deal with of how you finance sewer, water and roads, but also questions about the modern infrastructure and how that will be supplied in these settlements. And what is the cost of getting into this modern economy infrastructure?

Community-based health is being promoted. Community-based corrections activities are rapidly expanding. Education, social and housing reforms are all looking to see the local reactions to these reforms. Another one of particular interest is the introduction of new technology to a group of people in a setting that is not as amenable as in an urban area.

That gives you an example of the type of complex challenges these small communities are facing. The responses have to be based on the endowments of these towns. These towns have fewer people, fewer financial resources, fewer human resources and perhaps more natural resources, but they have to base their ability to respond to this array of global and local changes on their natural endowments. Because of those factors it's clear that it's going to be a more difficult challenge for rural and small town Canada than for urban Canada.

That said, we believe there is a federal role here. Clearly, there are national interests served by actions in rural Canada. The federal government has an array of mandates, jurisdictions, authorities and interests in rural Canada. Some of them were raised this morning in the brief parts I heard in terms of the need for jobs, the need for a healthy population, the need to reduce poverty, good governance and competitive and educated labour forces. These are national interests that are served by the 25% of people in rural Canada working toward those same objectives.

However, we see a need to amend the federal policy framework for rural Canada to allow the abilities of these individuals and families in communities - to pursue initiatives and to pursue their personal endowments and their desires for how they would like their lives to be lived. That's what we're characterizing as enablement - creating a structure that enables activity, enables people to makes choices and enables them to take responsibility for those choices.

We characterize that as one of moving from being a provider to one of being an enabler. One of the traditional descriptions you've heard is moving from rowing to steering, of concentrating more on the national interest and the ends as opposed to the means of getting there.

How would we get there? There are five basic steps. First, do not be afraid to say there are national interests in rural Canada. That should be clearly stated. The challenge is perhaps in integrating those statements toward outcomes, and that is step two. We believe there has to be an integrated outcome for the national interests to be raised to that level in order to create outcome statements like a healthier population, more employment or reduced poverty.

There will need to be indicators of how you measure that progress. We think that leads to national indicators and to local community-based types of indicators.

.0915

You could extrapolate some of the discussion on jobs in the woodlots today as an indication of part of this package. That would be one of the indicators, perhaps. Overall income may well be another one. So you would need a second step to develop these statements of outcome, the ways in which to measure your progress, and also, we would suggest, types of performance standards that should be expected both of government agencies and of local community organizations to participate towards the national interest.

These aren't necessarily steps that you have to take one after the other, like my child who is learning to walk; these would probably be taking place at the same time.

We call step three transitional assistance. There's a huge shift and it needs to be assisted. We need to keep in mind the idea that people ultimately have to help themselves, so what we would see here would be sponsoring innovative responses to these challenges, seeking them out.

There are some very good activities across the country. They should be sought out, analysed for how they contribute to national interests, and looked at for how communities can organize and successfully replicate them or tailor them to their responses. We should try to find new opportunities to do the same sorts of things in other places across the country.

There is clearly a need for human resource development. Again, this morning that was raised with the issue of the need to educate the labour force attached to the forest industry. There is a need to educate in a variety of ways for a variety of these challenges.

I also throw in that I think there's a great opportunity and a clear federal obligation or responsibility to help with collaboration between the native community and the non-native community. Most native communities are rural and have a clear set of challenges that are not all that different. It's a different context and different responses perhaps, but they also bring different assets to the table. I think there are tremendous opportunities for collaborative ventures. We have an example here in New Brunswick with Eagle Forest Products, where several of the local first nations are now participating on an equity basis in that industry.

The fourth is in the sort of self-interest area. We believe you will need a research agenda in order to achieve this, but there's a type of research that we feel is required, and that is that people recognize that the responses have to be created and designed by individuals facing those particular challenges.

It really has to be done by local people. Yes, government and academics and others can inform those responses, but the actual construction of it has to be done locally. We think that is very necessary to create these ideas of community-based indicators and recognizing opportunities and pursuing them and organizing for them, making the best use of the very scarce resources in rural Canada.

In our fifth and final point, we also think micro-enterprise is a real key that offers tremendous quick opportunities for rural economic development. Over 73% of all businesses in New Brunswick fit into this category of micro-businesses, which, for lack of any other definition, are considered to be those with fewer than five employees. Nearly three-quarters of the businesses in this province fit into that category, and I believe the national figure is actually higher than that.

What we have consistently heard, particularly of micro-entrepreneurs in small communities, is that they feel left out of the existing business assistance programs. While they're designed for what are called small and medium-sized businesses, they operate in a dramatically different context from these individuals in small communities.

These people are crying out for minimal types of assistance, minimal capital, some advice on technology, some personal advice on balancing their family and work concerns, how to access simple market questions of where their markets may lie, and how to get advice on appropriate use of technology and sharing the cost of technology. In the micro-enterprise sector itself, we think there is a tremendous opportunity with what would be rather limited resources attached to it.

So those are the five basic points. In summary, I suppose what I was hoping was that I would present a different view. I think rural and small town Canada is the appropriate way to look at many of these issues. Communities will be the agencies of change in rural Canada. The individuals and families and enterprises that make up those communities will be innovative. They have the desire and the ability to respond to challenges.

.0920

I think it's important to consider that perspective while you're considering what the federal role can be. I do believe there's an opportunity, if you would consider this enablement perspective, to actually enhance the contribution of rural Canada to the economy of Canada.

The Acting Chairman (Mr. Reed): Thank you very much, Mr. Higham.

Just as a matter of clarification, did you say that micro-enterprises account for 72% of all businesses in New Brunswick?

Mr. Higham: No, it was 73%.

The Acting Chairman (Mr. Reed): Thank you very much for that.

Mr. Deshaies, would you lead off.

Mr. Deshaies: Do you understand French? It will be a good day to practise my English.

We have in northwest Quebec, at the Université du Québec à Rouyn-Noranda - c'est une chaire. I don't know what the word is in English.

A voice: Chair.

Mr. Deshaies: On the rurality chair, they did the same study and they realized that to have a good economy for a small community, they needed a new school, services such as a garage, a small retail store, something like that. They proved it would then be possible for them to have their own economy. If they have a small structure we thought they would be dependent on having a big city around it. If they don't have this as a minimum, they would just pick up their services in the big city and they would slowly close the small community. Do you have the same results here in New Brunswick?

Mr. Higham: I couldn't give you an answer based on quantitative data.

I've seen a couple of studies in the prairies where that has clearly been the case. They have measured them by service levels and population levels, and they have watched the demise of small communities in the prairies. They have dropped very dramatically. It's a standard human reaction to services.

There are differences now, though. With the advent of new technologies, many of the services will be more accessible, even though they may not physically be in that small community. As we move more and more towards using communications that may well be offset - . There's some debate now on whether people are actually moving back into some of the small communities because of those types of changes, not just because of a disaffection with the urban environment. People are realizing they can pretty well get everything they want in many of these small towns again.

Mr. Deshaies: Yesterday we were at home in my riding and witnesses said that in general the federal program for health - people weren't adjusted. There had been a real need. One of the witnesses said that we need tools, we don't need a program, because in general if you don't have this condition, you cannot be on the program, so you can risk ill health.

You spoke about facilitators. Do you think it's better to have tools and have the decision made in the small community on what they can do with this amount of money than to have a program and have to serve this program?

Mr. Higham: My view is it's the tools that are important. That's what people are asking for, and what we're hearing as well. If you give them the tools, they will handle this challenge.

But the complaint is that many times the changes are taking place without any tools. They're forced to try to deal locally with a whole set of programs that are being changed rapidly.

There is not a great ability to mix the pieces of the programs to create a local response - that's a problem. Plus, not knowing how other people are successfully dealing with some of those challenges, they haven't had the opportunity to look around and say, well, so-and-so in your area may have done something very well with the school downsizing and changed it into a small business development place.

.0925

Without the opportunity to share the information amongst a bunch of rural communities, without the flexibility in the programs to allow them to be tied together in a way that's appropriate to the endowments of the local committee and communities, they're floundering in many of their responses.

We think the third element is the self-help tool you can build in a variety of ways. You can have not just a paper manual, but you can also build it by people, you can build it on computers, you can build it into institutional responses.

What's important is that the tool recognizes the operating environment of rural and small town Canada. It reflects the limited resources and the limited volunteers and the need to get it right, because you can't afford to be wrong twice. To me the highest priority is the ability to provide some tools to allow local people to pull their resources together in the best possible way.

Mr. Deshaies: Do you think the manner that the government tried, again, to create doubts about the small communities, to create doubts about the presence of the government through the small communities - The witness said yesterday they have the feeling that the government has gone away and they remain alone.

We don't have to forget that when the federal government starts to pick up tax from Canadians citizens, it's supposed to be to develop the region. Now the region supports the post office. The price for our telephones has risen so much for minimum services. It gives us the feeling that we are now alone and far away from the big city. The government is going away from us and remains in Montreal, Ottawa, Toronto, and so on.

Mr. Higham: Canadians have become used to the government helping them manage change. Many government programs over the last 30, 40, or 50 years have been designed to smooth out the bumps of change. Because of that history, the first response to any significant change is to say it is a government responsibility to help us. I think that's changing.

In small communities you see both responses: one of the government has to do more to help us, and another of no, the answer lies not in government now, but in ourselves. You're right at the switch of that type of opinion in small communities.

That's why I believe this approach is more appropriate. People are starting to say we need to take care of our own future and we need to take that responsibility.

Mr. Deshaies: Thank you.

The Acting Chairman (Mr. Reed): Before we go on I'd just like to ask the cooperation of all the members in recognizing that we are on a time line to a certain extent. While we'll try to build in as much latitude as possible, efficiency is the order of the day.

Mr. Ringma.

Mr. Ringma: Mr. Higham, I think you're on track. You're an articulate spokesman for identifying the change that is occurring in Canada today. Part of this change is going to be facilitated by things like the information highway. The government has seized on that. They're doing what they can to encourage it.

Your key phrases to me are that the federal government and governments, generally, should change from being a provider to an enabler. I applaud your perception in all of this.

Since I believe in what you are saying, how do we get the message out? You can start by doing it with this committee. I'm sure everyone here is listening attentively, and perhaps some elements of what you say may wind up in the committee's report tabled next spring.

.0930

I find you could be as well talking of my riding of Nanaimo - Cowichan out on Vancouver Island. You have the same thing. This same phenomenon is happening across the country.

How do we then get the message across? You have an educational thing here, not just for this committee, but for the provincial government and for the people in your communities. I would think the younger generation is going to be right there. They are there, sitting on the edges of their chairs, saying, ``Give me a chance and I can do it''. But the older generation, my lot, need that education.

I'm concerned, so would you please address that? How can we assist Mount Allison and your association - I presume this is a Canada-wide association - to get the message out and keep the discussion going so that everyone in all of the rural areas has a chance to give input? Just give us another couple of minutes on that.

Mr. Higham: It is a big challenge.

There's a huge infrastructure of getting information out. The federal government has its own bureaucracy and a variety of feelers in a variety of ways, and that's what we would suggest, at least for the committee, to concentrate on. That's a tough challenge, though, because what you're really talking about is a huge institutional attitude shift. Clearly there's an internal education process there.

There are two or three responses.

One is that this is what we've been saying for a little while, and we're struggling to survive, yes. We face a client group, rural and small town Canada, that doesn't have a lot of resources, so they're not able to purchase very much and they're not able to participate a whole lot in a lot of these discussions. There have to be some ways to get some information to that group at a low cost; there's no doubt about that.

If you can put these self-help tools in the hands of many of these communities that are searching for ways to do things, a lot of that will take care of itself. People are clamouring, saying, ``If only we knew how to organize for information technology, we'd do better at it. If only we knew of some examples of how people had used it to create small businesses in small communities, we'd do better at it. But how do we find that information?''

There are several ways of getting information out, such as traditional newsletters, bureaucratic networks and political networks. There's some need to use some of the existing organizational structures, such as the union of municipalities in each province. We would have to look at a broader strategy.

But you're right: it's a major challenge just getting that information out.

Mr. Ringma: I presume the facilitation of financing is as well. I would see government having a role in that, not necessarily making donations, but facilitating.

When I talk to small businessmen in my riding, that's one of the big things they say. They can't have easy access to the banks or anything else. It's a difficult job for them. There's a whole lot of areas we have to do work in, and that's one of many.

Thank you very much.

Mr. Higham: Thank you.

The Chairman: Thank you, Mr. Ringma. You caught me off guard.

Madam Ringuette-Maltais.

Mrs. Ringuette-Maltais: Thank you.

Maybe, Bob, you'll be surprised, but I'm in agreement with what you're saying. The greatest loss to rural Canada is probably that its young, educated human resources are seeking to meet their needs, and because of their level of education, their needs can only be met in urban centres in regard to jobs, culture, sports, you name it - all the modern needs of well-educated people. That's probably our biggest loss in rural communities. Our well-educated, business-prone people are going to live in more major centres. I think provincial and federal governments have a responsibility to provide the new technology that should enable those communities to maintain and to prosper, because information is the new economic tool that we can easily provide.

.0935

When provincial governments remove kids from small rural communities at a very young age in order to get their education in a bigger centre, that's the first step toward removing that human resource from that community. When the federal government removed rural post offices and put them in major centres, that was another move.

I think governments must assume a certain leadership in regard to giving back to rural Canada what rural Canada has given to urban Canada. With the new technology, whatever field you look at in government services, provincial or federal, if you look at fiscal services, there is absolutely no reason why government offices could not be located in rural Canada.

We have here in Edmundston le centre CIDIF, which is a world server on the information highway for the francophonie internationale. We're servicing 48 francophone countries throughout the world, and that's here in Edmundston, New Brunswick.

Those are the opportunities that the new information technology can provide, and that is the same in any sector. I think governments and the private sector have a responsibility to provide the rural communities with that basic new infrastructure, but unfortunately again the urban centres have the leading edge because they have the universities, they have the research teams, and they have the private sector.

I think probably one of the major recommendations of this committee would be some kind of fiscal incentive for private research and private infrastructure in regard to servicing rural Canada. Even to the provincial governments, there should be a special fiscal enhancement from the federal government to supply those basic needs.

We're no longer talking about roads, as you said earlier; we're talking about the new roads, the modern roads. If those services cannot be provided on the same level playing field as they are provided to urban centres, then again we're losing.

I thank you. Best of luck. You have our support in regard to the research you're doing. Colleagues, I have to go vote for you. Goodbye.

The Acting Chairman (Mr. Reed): We thank you.

Mrs. Cowling.

Mrs. Cowling: I want to pick up on one of your comments about a drop in transfer payments to the provinces. I come from Manitoba, and we are one of the have-not provinces. I know the transfer payments have been dropped; however, for those provinces that are have-not provinces we've topped up the equalization payments, and for many of us we are doing quite a lot better than we would have been. I just wanted to pick up on that, and I trust that's happening here as well.

Mr. Higham: I'm sorry if I've misled you. I meant the transfer payments to the local governments at the local level. Those operating grants or core grants, whatever they're called in each province, are being reduced across the country.

Mrs. Cowling: I just wanted to be sure that was on the record and clarified.

I want to come back, though. You indicated that 75% of all your business in New Brunswick is micro-entrepreneurs. I'm wondering how many of those entrepreneurs are young people who actually stay here and how many are women. We're finding in a lot of our studies that many of the people who are moving into that perspective with cottage industries and home-based industries are women.

.0940

Do you have the Women's Enterprise Centres here? Do you have Community Futures? If you do, what do you think of those programs?

Mr. Higham: I'm not familiar with a Women's Enterprise Centre locally. I do not know. I can't answer that.

In terms of commentary on the micro-enterprises, I haven't seen breakdowns of that. Again, that's one of the things that would be very interesting to look at.

We can cite our home-based business survey, which is a two- or three-year survey of home-based businesses. There's a pretty even gender split in home-based businesses in Atlantic Canada; it's pretty close to 50-50 in terms of who actually operates that business. Some other interesting questions of gender led us to suggest we need to do some basic, baseline data on rural women in Canada, particularly with a view to economic development opportunities, because we can't answer those questions. We think that is one of the kinds of baseline research that needs to be done.

There are Community Futures programs that have been changed in a variety of ways. I think you have someone coming in this afternoon from the economic commission who will be in a better situation to answer that question. I believe it's dependent upon the local areas as to what they chose to do with the programming. They've been merged in a couple of ways. I think that person will be better equipped to respond to that than I.

Mrs. Cowling: With respect to the young people, how many of those people stay within the small rural communities?

Mr. Higham: I couldn't give you a statistic. There's a publication that you're probably all familiar with, Rural Canada: a Profile, which was put together by the federal government. It notes that the youth have moved away, that there is less youth in rural and small town Canada. I can't recall the statistic. It's generally accepted and it's anecdotally accepted that the incentives for rural youth to stay in rural communities haven't been there.

The question is whether now is the time and there is the opportunity to keep them there. I think there's a real challenge right now in this transitional period between various ages. Again, to try to look at it optimistically, what an opportunity this is to bring the youth and the seniors together over common interests of technology and economic development and lifestyle in the community. That's the way we try to look at those kinds of challenges.

Mrs. Cowling: Very quickly, Mr. Chairman, I think the witness indicated that we're looking at an attitude change as we move through the transition. One of the comments we have heard from a number of our witnesses is that we are no longer paper shufflers and that we are moving into a new mode, which is sort of surfing the net, as I would call it. I'm wondering what your thoughts are on the information highway and how that would help rural Canada move ahead with the transition we're in.

Mr. Higham: It's key. There's a term called ``glocalization''. I don't know if you've heard that, but Thomas Courchene has suggested that the real reaction to globalization forces is that local or regional responses are emerging. B.C. and Alberta have a different kind of response to globalization from southern Ontario and the Maritimes. The reason for that is the type of assets and the type of ability that exist in those regions to respond to globalization forces. It's the local responses that are appropriate. I think that's a real key to the future of rural Canada.

The ability to use that technology is another question. Yes, there is some lagging in terms of hard infrastructure support for use of technology, but what we're hearing from communities is that the hardest question for them is the human issue. It's getting the people organized, bridging the age gaps, trying to come up with innovative local financing, trying to convince some people that there is value in information.

We are a community access site for the town of Sackville, by the way. We had someone in there last week who runs a photography shop. He was afraid to use the technology. He came in and got some training and he said, wow, I could be selling posters on the Internet. He didn't have to look only at Sackville as a market for his pictures. He could start looking at all these places. All of a sudden, his eyes were wide open. This was from just a half-hour look by a local young person, helping him weave his way through this question.

.0945

That was a long answer. I'll go back to the short one, which is that it's extremely important that it be done well, that it be done right, and that it recognize the constraints on rural and small towns to use it effectively, particularly right now when you're introducing it.

Mrs. Cowling: Thank you.

The Chairman: Mr. Reed.

Mr. Reed: Thank you very much, Mr. Chairman.

It's interesting how we are experiencing a common theme that's been running through the hearings I've been able to attend. One of them is that we should give them the tools and they will finish the job.

The other is that, in spite of the changes, the transition, the regionalization of decision-making, and so on, there's still a request for a federal presence. I think it's perhaps typified with the post office thing that we have gone through.

Madam Ringuette-Maltais actually touched on the subject. I wondered whether you had any other thoughts about the federal role here and how - .

You talked about transitional assistance, for one thing. Are we ready to provide transitional assistance without having it turn into a request for permanent assistance? Are there any other tools? I'm getting very discombobulated here, but are there any other tools that the federal government can possibly provide?

Mr. Higham: I think it has to be complemented first by the clear statements of the national interests that are served by local actions. If people can relate their activities to a contribution to Canada - that is something that may be lacking in many of the sectoral kinds of responses right now. If you're able to show that we created 10 jobs with this type of thing or we reduced the welfare rate by such-and-such, we're going to report it up the line as a positive contribution to the future of Canada. That's one thing.

The second is that the federal presence in this enablement perspective is more temporary, at least the way I see it. It is perhaps more about working with some local communities to develop specific types of tools, but then simply making those tools available to others. It shouldn't necessarily be an ongoing commitment. The request is for tools, and that's what should be there. The process of developing them will be important. To be sure they stay current is another question.

So I'm not sure you need to get involved as a federal government in a long-term, ongoing relationship. To me that's back into the provider relationship.

Mr. Reed: Thank you very much.

The Chairman: Just before thanking you and letting you go - . I apologize for having to take a phone call while you were making your presentation.

I noticed that a key area of your brief deals with micro-businesses. It's one that I have a particular interest in. If my question has been answered in the testimony, just say so and we'll go on. With respect to the issue of providing the necessary access to capital and the issue of providing the necessary mentoring services to micro-businesses, are those issues here in New Brunswick? Is the federal government fulfilling its role in that respect? Should there be an increased role? Is the private sector doing the job that you believe it should in that respect?

Mr. Higham: I'll leave with you a recent announcement of Mount Allison University that is called the Micro Enterprise Innovation Exchange. This simply describes our approach to some of those issues and some of the priority areas. I say that because our top priority is micro-financing.

We do not believe that the existing system is meeting the micro-capital needs of micro-enterprises. We have had scores of calls from around the Maritimes asking how we arrange to create this access. We are operating a micro-lending pilot project in Campbellton, which is an attempt to look at peer group lending in this context. There is a Calmeadow peer group lending operation in Nova Scotia. Calmeadow, as you may be aware, is undergoing dramatic restructuring. They are committed to peer group lending per se. Our micro-financing proposal or approach reflects what we've talked about so far, that not all ways to deliver services are equally good in every community.

.0950

There is an array of micro-financing options that are in practice around the world with varying degrees of success. Peer group lending is just the highest profile one. There are many other ways. You can do community savings accounts. You can put money into a credit account that people can borrow against. You can do direct loans. You can do 50-50 opportunities and sweat equity opportunities as well. There are many ways to do that in small communities.

We propose that we need to document, analyse and create the tools that would allow various communities to choose the ones that would be best for them. Again, I don't think it's been well explored or documented, or that the options are there. I don't think the tools for micro-financing are there.

The Chairman: Do you think it's appropriate that Canadian banks and the private sector, although they might not have the appropriate delivery networks for providing that kind of lending, should be providing part of the capital for doing this? Calmeadow is supported in a certain respect by the Royal Bank. Is that an appropriate model? Should they be doing more of that?

Mr. Higham: I'd be less concerned of the source of the capital, just that it's there. I think there is also a role for some of that capital to be raised locally, again to show the commitment of the local people to their own economy. I think again it's a bit of an academic response, but yes, it would be great to have some capital from the financial institutions. It's just as important to make sure it's local as well.

The Chairman: Was one of the CCIPs approved in New Brunswick?

Mr. Higham: What is that?

The Chairman: The Canada community investment plan program of Industry Canada. Are you familiar with it?

Mr. Higham: Is that the knowledge-based -

The Chairman: No, this is a model program they've put in place for community investment pools where they are providing, I think, two-thirds of the funding over five years to create a community investment pool, where the community itself will identify equity sources and then place them with the businesses operating in that community.

Mr. Higham: No, I'm not familiar with it.

The Chairman: We should make sure you get some information on that. I'll ask the clerk to make sure that happens.

Thank you very much, Mr. Higham. I appreciate that you were able to provide the testimony. My fellows up here say it was very interesting and dealt directly with some of the issues we're dealing with as a committee.

Mr. Higham: Thank you for the opportunity. Good luck.

Mr. Ringma: Is this your address at Mount Allison? Could we contact you through the Rural and Small Town Programme at Mount Allison University?

Mr. Higham: That's it.

Mr. Ringma: I notice you're here as an individual, but you're -

Mr. Higham: That was an error. I am here as part of Mount Allison University's Rural and Small Town Programme. I'll just leave this micro-enterprise piece with Roger.

Mr. Ringma: You have just one copy?

Mr. Higham: I have several, actually.

Mr. Ringma: The chair would like one, and if I could get one, I'd appreciate it.

Mr. Higham: Thank you.

The Chairman: Thank you.

I'd like to call our next witnesses, from the New Brunswick Economic Council. We have Anne Bertrand and Joanne Losier. Welcome. I'd ask you to make an opening presentation and then we'll turn it over to the committee for presentations.

Ms Anne Bertrand (President, New Brunswick Economic Council): We have prepared a brief for you today in French. We will present it in French, and we're open to questions in both English and French.

.0955

I'll first start by introducing who the Conseil économique is.

[Translation]

The New Brunswick Economic Council has over 1,000 members, who are francophone business people in the province. Since the francophone regions are largely rural, we work in the major rural regions in New Brunswick.

We are pleased to be here today to offer our viewpoint on your study. You have been given a copy of our brief and, if I may, I would like to read it. I am sure there will be questions at the end.

We would like to begin by talking about natural resources and rural economic development.

Here in northern New Brunswick, you are in the centre of a region whose economic base is and has always been closely linked to the development, processing and marketing of natural resources. With just a few exceptions, all our manufacturing companies specialize in resource development. In their operations, they use modern production technology and, through innovation, manufacture an increasingly broad range of new products.

Their dynamism has helped create the wealth needed to develop several small urban centres which have now been established as regional centres and are able to provide personal and commercial services. In the case of the vast majority of our members, these achievements took place in small communities which you might describe as rural but which, through modern means of communication, are quite different from traditional rural settings. In the new economy, the dichotomy between urban regions and rural regions no longer means the same thing.

However, we must recognize that major changes are taking place in our economy. This restructuring has come about as a result of technological developments which enable us on the one hand to produce more with a smaller labour force, thus creating downward pressure on jobs, and on the other to innovate through the marketing of new products and the creation of new businesses in sectors presenting very attractive business opportunities.

This restructuring also comes about as a result of the globalization of trade, which increased competition while providing new markets. It is also a result of what you have done, that is the many changes in government policy at all levels. We have to realize that the security provided by the welfare state was more important for those regions which depended the most on it, that is the less well-off regions. Those are the areas currently most affected by government policy changes.

How can we ensure that all these changes will not jeopardize our progress towards dignity and self-sufficiency? How can we ensure that we will be able to benefit from the opportunities offered by this new environment, over which we as small communities have little control?

In the first section, we will show the importance of the resource sector to our economy. We will then focus on the constraints and challenges faced by our communities. In conclusion, we will address the problem of the long-term future of rural regions in New Brunswick and explain what we believe the role and contribution of the federal government should be to the economic development of these regions.

The resource sector is our link with the world. In the case of the primary sector, we have to go back to the 1991 census data to obtain information on the contribution it has made to jobs in small Acadian communities. The advantage of the census is that it enables us to break down the area very precisely. We therefore consider as small francophone communities those included in the following regions. The counties of Madawaska, Restigouche, Gloucester and Kent, the subdivisions of Grand-Sault and Drummond in the County of Victoria and the subdivisions of Alnwick, Hardwicke and Rogersville in the County of Northumberland.

In 1991 in these rural regions, 13,440 jobs were linked to the development of natural resources. That represents 11.1% of all jobs in the regions. In the other regions of New Brunswick, the contribution of the primary sector to the job market is only 5.4%, while the figure for Canada as a whole is 6.1%. The resource development sector is therefore larger in our province.

.1000

What is the breakdown of jobs for each particular resource? Forestry is in first place with 36% of jobs, followed by fisheries and fish farming with 24%, mining with 22%, and agriculture with 18%.

In the manufacturing sector, we can, through the information published by the New Brunswick Department of Economic Development and Tourism, assess the importance of resource sector industries. The figures are given in Table 1 on page 5.

The structure of the Acadian manufacturing sector has changed little since the early 1980s. The vast majority of jobs remain directly linked to the processing of natural resources, but what we produce subsequently leaves our area for the markets of central Canada and the northeast of the United States.

In 1982, processing of agriculture, fishing, fish farming, forestry and mining resources accounted for 83% of jobs in the secondary sector, as compared with 80.4% in 1991. Therefore, there has been a drop. These industries are often seasonal and are not technologically intensive.

That is why the economy of these regions has serious problems in its ability to adapt to structural changes. Table 1 shows the breakdown of jobs, by industry, in 1982 and 1991. For both years, the food industry dominated the manufacturing sector. In the case of the northwest it was the processing of agricultural products, whereas for the other regions it was fish processing. The latter industry provided jobs for 39% of people working in the manufacturing sector in 1982, and 39.7% in 1991. Forest products processing is in second place.

When you add up the contribution of the wood, furniture and paper sectors, you see that they represent 30.3% of jobs in the secondary sector in 1982 and 26.4% in 1991. This drop is due to the reduction in the number of jobs in the paper industry. Finally, the mineral processing sector accounted for 13.7% of jobs in 1982 and 14.3% in 1991.

Given the importance of the resource sector, at both the primary and secondary levels, the economy of the Acadian regions of New Brunswick is very sensitive to price fluctuations in natural resources. The delay in reopening the Atholville pulp plant clearly illustrates this problem.

The contribution of the resource sector is not limited to the primary or secondary sectors of the economy. It is also important in the service sector. We would mention higher education and training institutions such as the School of Police Sciences of the University of Moncton, and the School of Fisheries of New Brunswick in Caraquet. Other organizations are working on research activities. This is the case with the Centre de recherche et de développement de la tourbe (Centre for Research and Development of Peat) in Shippagan. The Eastern Canada Soil and Water Conservation Centre in Grand-Sault, the Centre de formation du bois ouvré (Training Centre for Milled Wood) of the Campbellton Community College, and the Food Research Centre at the University of Moncton (Moncton campus).

Resources are also essential to the tourist industry, in such areas as sports fishing, rural tourism, winter sports -

We shall now look at some of the difficulties and challenges. Given the relative unavailability of data for small communities, it is difficult to analyze short-term economic trends in these regions.

Despite the poor quality of the data in Statistics Canada's labour force survey, a few trends can be spotted. The data allow us to isolate northern New Brunswick economic regions like 310, 350, 320, 330 and 340.

What do these data tell us in terms of job creation, unemployment rates and population-job ratios?

.1005

The aggressiveness of local entrepreneurship in the north of the province and the immigration of entrepreneurs have meant that from 1991 to 1995 the increase in jobs was higher than in the southern part. During the period, the number of jobs went from 88 000 to 100 000 in the north which is an increase of 13.6% while in the south, the number of jobs went from 196 000 to 214 000 giving a growth of only 9.2%. Canada-wide, growth was 9.4%.

The data on the unemployment rate and the employment-population ratio are less encouraging, however. In July 1996, the unemployment rate was 13.3% in the north compared to 10.3% in the south and 9.6% for Canada overall. As for the employment-population ratio, it's clearly lower in northern New Brunswick. I would refer you to the statistics provided.

High unemployment and low labour participation imply income levels lower than the national average. The other variable affecting income is the low level of schooling. Problems having to do with a lack of quality jobs often lead to the immigration of a large number of new graduates from post-secondary training programs. The decrease in the number of jobs in the areas of health and education accompanying budget cuts in those areas add to the pressure at that level.

As for its wealth of resources, northern New Brunswick doesn't envy anyone. In each of the four major sectors, the diversity of its resources has lead to some diversification of exploitation and processing activities. Earlier, we touched upon the importance of jobs in forestry, for example, where the wealth for forest reserves has lead to the industrialization of many smaller communities and given birth to major paper mills. The same goes for agriculture, fisheries and mining.

The management of these resources does, however, pose certain problems when the stability of supply in the long term and the harvesting of resources to their full potential are envisaged. Two examples will make it easier to understand these problems. First, in the fisheries, the problem posed by processing overcapacity in some sectors shows that the exploitation of those resources was badly planned and that the capacity of the resource to sustain the processing industry was badly evaluated. The resources put into setting up the plants could have been directed to secondary processing activities with a view to increasing the value added to those products.

In forestry, the possibility of exhausting the inventory and certain species within the next 20 or 25 years shows that we have attained the maximum level of harvesting for our traditional products. The players in this industry are aware of how some resources are being wasted because of our present harvesting practices. They are also aware of the challenges faced in protecting habitat and areas reserved for tourist and recreational activities.

So we face many challenges in exploiting and processing our natural resources. We must also look to comprehensive management of these resources that take into account the means of the different players in those sectors. We must also think in value-added terms.

Today, still, a major proportion of our resources is exported raw. There is real demand for this production from external markets and we can't neglect this enormous production. However, thanks to research and development of new products, we will have to count on high value-added production. That's our whole dilemma.

In these areas, we must avoid at all costs those mistakes which would compromise the stability of supply of those resources. Our region has lived, still lives and will continue living off the harvesting of those resources. It's in this context that we must reflect upon the federal government's role.

.1010

The federal government intervenes directly in the management of resources in the fisheries only. From the scientific point of view, it is a very complex question. The main problem, in our opinion, stems from the lack of co-operation between the provincial and federal departments of fisheries to ensure comprehensive management of our resources to avoid overfishing and ensure the stability of supplies.

It would seem that intergovernmental relations have not improved in that sector. However, mechanisms should be set up to avoid planning errors as much as possible.

In this area, the motto should be: maximum and sustainable harvesting of the resource. Everything must be done to ensure the stability of business and optimum exploitation of the resource.

The federal government also intervened through funding, in whole or in part, of organizations dedicated to the development or protection of resources. We mentioned earlier the examples of the Eastern Canada Soil and Water Conservation Centre and the Peat Resource and Development Centre.

As the federal government does away with its practice of subsidizing industry, it should then intervene in this kind of project. Research and development of products are essential to broadening our activities in the area of high value-added products.

In many sectors of resource processing, Acadian businesses are young and relatively small in size. On their own, they can't support major research and development activities. However, over the medium and long term, they could pay royalties to those research and development centres developing technology or products they use, or make, thanks to that expertise.

This type of partnership is essential in an economy based on small and medium businesses. However, it does require a change in the thought process of all the players in resources-based industries.

This change in the thought process means the government must increase its support to SMBs through programs favouring the improvement of management practices.

On the funding side, one could come up with other examples of projects ensuring the long-term development of those industries which the federal government could support.

At that level, the federal government, in the past, has shown much initiative. There is the Business Development Centre program, for example. The success of the LEDA pilot project in Kent County is eloquent. This initiative of the old Employment and Immigration Department shows the change of orientation the federal government brought to its regional development aid programs.

As this approach leaves more room for local community initiatives, we support this kind of project and encourage the federal government to maintain and even increase, if possible, its support to these organizations. It's a good example of policies designed to answer the needs of specific communities.

We agree with the federal government and its decision to do away with or reduce its business subsidy programs. It is true that businesses having acquired some maturity should be able to find the capital necessary for their expansion in the private sector. However, that is not the case of young entrepreneurs, especially those who want to develop non-traditional products. For those young people, we think the federal government should maintain and even increase its support to entrepreneurship development through loan programs adapted to the needs of young entrepreneurs. These programs should be exclusively targeted for young entrepreneurs. In our opinion, this is one of the keystones in a whole range of policies targeted to supporting diversification of resource-region economies.

Conclusions and recommendations of the Conseil économique: recently, the Conseil économique du Nouveau-Brunswick undertook a long-term study in co-operation with the Atlantic Canada Opportunities Agency on Acadian entrepreneurship and risk capital.

.1015

We brought with us French and English copies of our study which includes a whole table of statistics that will certainly help you in your examination. Many conclusions and recommendations came out of this and we think you will find them relevant.

First, the study revealed that young Acadians put more value than their parents on entrepreneurship as a career choice. That stems in great part from a movement within the Acadian community away from a more traditional way of life towards something more focused on the world of business and trade. The study also has praise for different initiatives such as those of the Conseil économique du Nouveau-Brunswick focused on promoting a positive attitude towards entrepreneurship in our Maritime francophone community. We believe those are further excellent reasons for the federal government to grant even more support to education for young entrepreneurs.

But it's not only our young entrepreneurs who can profit from more training. Our study shows that too many entrepreneurs are refused funding to expand their business or develop a new project because of a deficient or even inexistent business plan. The study therefore recommends that we should find ways to make entrepreneurs aware of the importance of properly planned management. The Conseil économique du Nouveau-Brunswick intends to follow this up through an awareness campaign, for example.

We also will want to support the development and distribution of tools encouraging the most experienced entrepreneurs to carefully plan for the changing of the guard in their own business. New Brunswick's francophone community presently has a first generation of entrepreneurs who will soon have to pass the reigns of their business to their children or others. It would seem that the importance and the scope of the stakes involved in passing the torch within the business are not entirely understood. This situation shows once again how important it is to encourage and support training programs for entrepreneurs.

In our opinion, the economic development of this country's rural regions goes through the development of entrepreneurship as well as research and development of new products. That's why we are ready to work very hard with the different government players with a view to finding the solutions best adapted to the development of our region.

In conclusion, I would like to say that the two most important things for us are research and development and entrepreneurship. Those are the two main messages we wanted you to hear. Thank you.

[English]

The Chairman: Thank you very much. We'll turn to questions.

Monsieur Deshaies.

[Translation]

Mr. Deshaies: I won't have very many questions for you because your presentation was very clear. The conclusions are specific.

I only have one or two small questions. Do you think that federal government structures facilitate the kind of communication that will lead to the development of programs favouring local initiative?

When you fill out a document for a specific program, you send it somewhere, you wait for an answer for a month or two and if it is negative, you don't know who to talk to to get things changed and so on.

Yesterday, some people were telling us that often when you have specific needs you don't know where to go. There are no decision-makers with the power to adjust programs. We'd like to see programs that are better adapted to rural communities. Do you think the present structure is deficient in this respect?

Ms Bertrand: I would say it is very deficient both provincially and federally although we have seen much progress provincially, the level closest to us, in the establishment of a single wicket where all kinds of help can be given to young people or even to those who have had to quit their jobs because of a lay-off, to help them develop their projects.

.1020

Our study has shown that people have good ideas but absolutely don't know how to go about becoming an entrepreneur. I don't think that is particular to New Brunswick. That's the case everywhere in Canada, and I'm sure, everywhere else in the world. In any case, we're just back from Romania where they are going through the same thing.

The thought is that there is a bit of magic in becoming an entrepreneur, but that's not the case. We need training tools. I think people don't recognize that to become an entrepreneur, you have to have the training before you have the success. If the federal government can get this very important message across to a lot of people, even to our members - many of our members absolutely need to hear that message - I think that we will have solved a huge, huge problem and we will have accomplished much.

We're constantly working to offer services to our members for them to become better entrepreneurs, to start businesses and so forth. We need people like you, at the federal level, to help us do this because we are small. We're only one organization, but we represent over 1,000 members which means 2,000 workers. That's not too bad for New Brunswick.

So if we could work with the federal government and the provincial government, with whom we're working very closely already, to train our young entrepreneurs to get them going in business, and add to the training of entrepreneurs, we could transform the whole harvesting of natural resources into different businesses. We're going to be intelligent in managing our natural resources. We won't simply be content with primary processing. We'll go to secondary and even third level processing.

For example, instead of sending our wood to eastern Canada, our fish to Japan and so forth, we want to use our natural resources and do more with them here before they leave our regions. That's going to be done in the business world. So we need entrepreneurs. That's what we're telling you. There is a huge need for research and development to develop those markets, to develop processing and I think that you can help us. The federal government must be there with its tools.

You can come and see organizations like ours to know how to set up those programs, but I think that everyone is saying the same thing: everybody wants to become an entrepreneur, get into business, but they don't know how and the present programs are not efficacious.

Mr. Deshaies: The federal government is implementing programs coast to coast. Wouldn't it be better to invest a bit of money in your community and tell you: ``Now, use this money wisely and make it multiply''?

Ms Bertrand: Yes. We do like getting money. However, governments in general don't have the reputation of wanting to get into business or train business people. The private sector is going to do that. We come from the private sector. We're a non-profit organization. If we get funds to get our training program awareness campaign going, you will be using private sector people to do it. We could do more, with our networks. Yes, I totally agree with you.

[English]

The Chairman: Mr. Ringma.

[Translation]

Mr. Ringma: You were here during the presentation made by Mr. Higham from Mount Allison University. Your presentation is certainly different, but there are similarities.

.1025

You addressed the matter of change in mentalities and that sort of thing. So I'd like to ask you if you agree with Mr. Higham who would like to see the federal government's role change from that of provider to facilitator. I hear the same message in your presentation. Could you give us more detail on that?

Ms Bertrand: We're in total agreement. It's what I was saying to Mr. Deshaies. The federal government's role, the role it has had during the last few generations, must change. We have taken Ottawa's beautiful gifts, but it creates dependency.

Besides, because there was an abundance of natural resources, it was natural to have daddy, sonny, grandson, mother and aunts always working in the fish processing plant or cutting wood, in other words doing the same seasonal jobs in the woods, the fisheries or the mines.

If we're to change how we operate with natural resources, the government is going to have to get out of the business of hand-outs. We've seen this with the unemployment insurance reform. The Conseil économique fully supported the social reforms. So we agree. We don't want any more gifts or free money.

However, the federal government still has a very important role to play because - do we actually have to spell it out - it has the funds. In the private sector, we don't have the funds to do everything we'd like to. So, instead of simply handing us money, we're asking you to take on the role of facilitator because there is a whole pile of organizations like ours who can make our young people understand that they can't be content with just working a few weeks a year and then falling back on unemployment insurance.

We have to tell those young people: ``Listen, why not start making chairs or tables beside the wood processing plant near Campbellton?'' Now, how do we do that? By giving them the necessary training and tools. With your help, we would facilitate all that for them.

It won't happen overnight, but the parents, the young people, they'll all start thinking differently and thinking about the kind of work they'd be doing.

The study on Acadian entrepreneurship has shown that our young people don't want to work in the fish plant all their life, any more. The writing is on the wall. They know they have no future there. So they want to go into business. But there are not many business opportunities in our rural areas. They have to be created. How? By training them, by helping them become good business men and women and by providing them with an opportunity.

Earlier on, I heard you talking about micro-financing. Our study has shown that there is an enormous demand for financing in the $100 000 or less bracket. The banks are not interested. Venture capital people don't want it. You always hear them talking about half a million dollars and more. Our members need micro-financing. It could be for cash flow or for expansion, but they need it.

The federal government should get all the banks together and tell them: ``Listen, SMBs are going to create more jobs in our country than the mega-companies. So listen to them when they need $50 000 and more.'' That's the kind of message I'd like to hear you delivering to them.

.1030

I'd like to see that kind of change in the thought process, not only in government, but everywhere.

I'm sorry I took so much time to answer your question.

[English]

The Chairman: Mr. Reed.

Mr. Reed: The comment I must make is what a difference a decade makes. I have a 32-year-old son who wants to be an entrepreneur. He has a good basic education and so on, but he laments that during his years in secondary school there was no emphasis whatsoever put on the area of economic independence through entrepreneurship. The way he would phrase it if he were sitting here today would be ``Dad, I was taught by a bunch of socialists''.

It's delightful to see the perception you bring to this committee that entrepreneurship has taken on a new life. What I understand from what you're saying is that what we need here are the tools to assist it, to make it work. It's a common theme that we've been hearing throughout these hearings. So you underline a very strong message to us. Certainly I believe that, especially with the tools that are available to us now, the federal government can, must and hopefully, with a push from us, play a vital role in that.

I don't know what I can add in terms of questions. Since you have pointed out this change in jobs and the availability of work in the resource sector versus the other, I should ask whether there has been any significant transfer of people out of resource employment into the new economy.

Ms Bertrand: It's very early to tell. Our group represents francophone entrepreneurs, and this francophone entrepreneur is quite a new thing. Traditionally the francophones of this province were indeed mainly involved in the resource sector. Our first generation of business people has made significant advances in getting away from that, or not relying on it as much, or taking the natural resources to a second level, which is excellent.

Our young people right now are seeing their mom and dad in business, whereas our parents never grew up with that mentality or that picture. They certainly have a new willingness to do this, but it's too early to tell whether it's going to significantly impact in our areas.

The problem we have is that the resource sectors are largely in rural areas, where we predominantly offer services and products, but we don't have major urban centres to continuously generate and influx the need for new jobs and new businesses and new ideas. It's a struggle, but the fact that they're doing it is quite remarkable. Our studies show that there were more people going into business up north than in the south. We're saying this is kind of nice.

.1035

I think it's a product of a lot of factors, which you indicated. The writing is on the wall, as I stated earlier. There's nothing for them in the future. They know. When the shops are closing down, there are multiple lay-offs and is the plant going to open again - They're saying that's not for me. Our youngsters are more educated. They're saying I have a degree, I'm not stupid, I can do something.

As well, going into business is not a dirty word any more. When I was growing up, and I'm not that old, if you weren't a priest or a nun - we're a largely Catholic region - you went to be a doctor or a lawyer, which I became, or whatever, and the others went into business. We had a very negative approach to this whole idea of developing entrepreneurial skills and what that meant.

It's really nice now, because it's hip to be in business. The Bay Street boys are great, but it used to be different. This whole connotation has somehow made its way to New Brunswick, and we're very happy to see it. but the phenomenon we like is that the little guys are creating the most jobs.

As I was saying earlier to Mr. Ringma, if the banks could see that we're not going with the mega-guys any more, we're going to see a lot more of the small and medium businesses. Since they're creating the jobs, they're going to be the ones to look for in the next 20 years, so why not look at micro-financing, which seems to be such a problem?

Our Conseil économique is looking into that. We're much too small and we do not have the capacity to launch a micro-capital venture-type of organization. We just can't. But we have decided to launch a campaign on training, teaching how to manage companies - get a board, get a mentor in the company to help you run it - and tools on how to better obtain financing. It is unreal what they don't know about business plans.

An important point that was added to our brief is la relève, which is succession. After a company's creator wants to move on and retire - don't forget, these are first generation entrepreneurs - if they do not plan to have a successor, we're going to have a problem. We've seen that problem and we're attacking it, but we need funding from the government to help us do that.

I'm going to let my directrice, Madam Losier, tell you about a wonderful tool we created with the help of federal government money. I thought that might be a nice thing to tell you about today. You'd like something positive in these presentations.

Joanne.

Ms Joanne Losier (Executive Director, New Brunswick Economic Council): A few years ago some visionaries saw the need to create some sort of tool to entice people or stir up brains as to how to start a business. Those people got a hand on a project that was first done in Quebec called Posséder mon entreprise, which has since been translated into ``owning my own business''. That was a television series in 13 steps, with the ultimate step to produce a business plan. That show, which was also a course given on TV with class activities, had tremendous success. Taking into account that it was the first time in French in the Atlantic region, it surprised a lot of people.

From then on, people who were working with the previous group saw that since we had shown people - . My comparison is that if you showed people how to walk - look at those who run. So we created another tool, based maybe on the Venture TV show, and another show called The Leading Edge in the Atlantic provinces. Our show is called Gens d'Affaires. It's now in its third season and features entrepreneurs, francophones, from all over the Atlantic region.

.1040

Our main goal with this show was to help change the mentality, because it is human nature that we imitate others. If you have role models that you can see and somehow teach, show people or de-mystify what is the business life, it will create a better climate for entrepreneurship. We have had the technical and financial support of federal agencies and departments for those projects, and I guess that's why they're still there.

Tools like that with a longer-term reach will transform the world we live in, or get it to a higher level.

I'm younger than your son, and I was taught by the same teachers. My father was one of them, in fact, but my mother is an entrepreneur, her father was one and my great grandfather was one, so I got both of those. It's by living it and seeing it that you know what it is. So it has to be viewed in a better light in society for the rest of it to follow.

Mr. Reed: Thank you.

The Chairman: Mrs. Cowling.

Mrs. Cowling: Thank you, Mr. Chairman.

I'm sorry I missed the beginning of your presentation, but I think I've picked up on a number of your comments.

I want to say that of my family of four, three are in their own businesses and doing very well, so I clearly understand where you're coming from.

In my riding, which is in Manitoba, I also have a fairly large francophone community. You mentioned that you are francophone entrepreneurs. Are you sharing your ideas and networking with other communities across the country with what you have been doing? If not, as the provider of the information and of what you are doing here quite successfully, is the information highway one of those tools with which you could share your ideas and experiences with other areas of the country?

Should we be taking a single-window approach or should our approach be based on the realities of the regions across the country, which in fact are rural?

Ms Losier: It's interesting that you mention that, because just a few days ago our vice-president was at a national forum of municipalities and French-speaking business people throughout Canada. That event followed three or four regional forums, one of which was in Manitoba. I think the French municipalities association was one of the first instigators of that activity, which was supported by the federal government, by the way.

Yes, there is a need for French-speaking business people to network, maybe more so among the ones outside of Quebec. If Quebec has a higher density of francophones outside, we have a different reality in which we live. In fact, there are talks right now to maybe implement some sort of structure for the networks to work better and for the flow of information to be facilitated.

.1045

By the way, our show, Gens d'Affaires is broadcast on RDI, le Réseau de l'information, the French version of Newsworld. We do have viewers in all the western provinces, and in Quebec and Ontario also, which serves us well, because we need to change the perception people have of Atlantic Canada.

We also have another project in the works for a web site on francophone entrepreneurship. We would gather all the information on the new business practices and on the tools that are there to facilitate the flow of information, the new network strategies or means. Of course, we know the ``web'' is a buzzword right now, but we figure we have to be at the forefront of all that, and the rest will slowly make its way.

Mrs. Cowling: One of the witnesses we heard from earlier in one of the other regions of the country mentioned the importance of volunteers and volunteerism. As you know - and this is my own personal view - the economic stability of rural Canada has really been on the backs of volunteers. I'm wondering how we can change the attitude that seems to be out there right now to encourage volunteers to come forward to help rebuild and renew rural Canada.

Ms Bertrand: Your question is so appropriate. I'm a volunteer. I run my own law firm practice for lawyers in Fredericton. I took on the presidency of this organization in April. I'm having second thoughts. It's a lot of work.

If there were more people like that, I think it would make a world of difference.

If we take an example with our own people, we have a board of 17 people in business who are all volunteers. We have paid staff. Joanne's on salary right now, so we're all right there. We have paid personnel, but all of the activities we do are largely done by volunteers.

You will find that this situation is quite rampant in rural communities. In francophone rural communities there was a culture that people just gathered in groups anyway. They liked to do things together as a form of communication, as a way of getting the news on what was happening where, and what not. That just evolved.

So I don't think we have a problem with getting volunteers. I find that in today's world it is extremely difficult to maintain the level of volunteers and the work that is required. I'm personally living it right now, and it's extremely difficult, but I'm also enjoying it as well. It's not everyone who can, unfortunately. I don't know that there's anything we could do except maybe praise our volunteers continuously, as communities are doing.

Ms Losier: In addition, two years ago we took on a project after we were asked to manage a program that was intended for high school students to do des stages, practicals in businesses to give them a better sense of what type of job, what type of career they wanted in their years to come.

One fact I've noticed lately is that more and more governments are giving responsibility and sometimes, but not always, money to not-for-profit organizations to run some programs.

.1050

From this experience, I think we should be cautious, because the mindset is kind of fast. I'm not sure that all those organizations were well financed and had structures to manage all that. They're not all in the same situation, and maybe we should review how much we give and at what pace to the non-profit organizations, because they cannot do everything and there's a danger that we will lose a lot of volunteers by draining them. There's a caution there that I think should be heeded.

Ms Bertrand: There have been cuts everywhere. We've also suffered cuts. Being non-profit, we cannot raise funds ourselves except through certain projects. Not all the projects we do to help our member entrepreneurs can make money. So when we suffer a cut, we suffer a cut to a lot of services to our members.

It's kind of ironic, because cuts coming from the federal government stop us from doing all we can to help your mandate.

If you can send a little message to Ottawa, that would be nice too. Thank you.

Mrs. Cowling: Thank you.

The Chairman: Thank you, Marlene.

I have a couple of very specific questions to explore.

On the issue of mentoring and training small business and entrepreneurship, the Business Development Bank of Canada, which was previously the Federal Business Development Bank, has an allocation each year in its budget to specifically do training and mentoring, which is separate and apart from the lending operation that is done on a cost-recovery basis. This is an actual expense to the treasury. They have as a mandate to deliver that type of mentoring. Is that occurring in this region?

Ms Bertrand: The Business Development Bank of Canada has given a great amount of training to the business sector. What we've been hearing is that not all the programs are well run or worth the money. They're cost-recovery programs, so they do cost money. We do not operate as such. However, there is a program that is very well regarded. It's the one on la relève, the succession, and we intend to work with the Business Development Bank to make that program available to the members.

The Chairman: So you're saying that the Business Development Bank should be looking at some of their programming, bringing it up to date and making it more effective.

Ms Bertrand: Yes.

The Chairman: I know they'd be quite willing to find partners with whom to deliver it.

On another new program from the Business Development Bank of Canada, they have their new micro-business loans. I don't know if you're familiar with that program. It will provide credit up to $50,000 for a new start-up and $25,000 for additional credit for an existing business. It is strictly for micro-businesses.

They are looking at companies with growth potential. That's strictly their major criteria. They are not reaching for collateral, per se; they are reaching for management skills and business plans. They have tied to the program that they will not advance the money without the entrepreneur either demonstrating or going through the appropriate training and/or mentoring. It's tied to your ability to get the financing, and they do that on a cost-recovery basis, as you mentioned. The cost of getting the training will have to be a cost of starting the business.

I'm wondering whether that program has found its way to this region.

Ms Bertrand: We're vaguely familiar with that program. I don't think we've seen any examples of any A to Z type of results from that yet. One of the things we hear is that it is expensive to take a program from the Business Development Bank, and with this new program you're talking about, they still have to pay to go and get the training before they can have some kind of exposure to the micro-financing.

The Chairman: They don't necessarily have to buy into their program, but if they had not been able to demonstrate the ability to manage a business, they were not going to give them the micro-credit.

Ms Bertrand: That's an excellent example, for instance, of partnerships of two organizations, such as one like ours, which would provide the training or the incentive to find the training sessions, and what not - .

The Chairman: Where is the Business Development Bank's closest office?

.1055

Ms Bertrand: In Edmonston, Bathurst, Moncton.

The Chairman: You should be talking to your local manager of the Business Development Bank on that. I agree with you that it is a tool and it is not that well known yet, and it is one that should be.

You're talking about setting up a web page. Are you familiar with Strategis, which Industry Canada has? There is a wealth of information there for your small business clients to tap into. I think it's 500,000 pages worth of information.

You mentioned that your organization doesn't have the tools to get into micro-business lending. I can appreciate that.

Do you have the Community Futures Development Corporations operating in this area?

Ms Bertrand: Is that what you were talking of earlier? We noted it. What is the name of that program? Is it CCIP?

The Chairman: In Ontario it's CFDC, Community Futures Development Corporation. It was originally HRD; now it's Industry Canada. They provide credit of up to $75,000 to small businesses.

The reason I bring it up is because you might want to look at it. In Ontario one of the major chartered banks went into partnership with that organization and simply said they had capital but they didn't have the ability to deliver very small loans in rural Ontario. They just didn't want to do it; it wasn't profitable for them. But what they would do was provide money to them at below prime, which they could then turn around and break down into the small segments of $5,000, $10,000 or $15,000 and lend it to their small business clients.

In other words, they recognized their deficiency in lending to the micro-business sector and they recognized the lack of a delivery network that they themselves had, so they sought out and partnered with an organization that had the delivery network but did not have the capital.

I think it would also be a model that could be used here in New Brunswick.

Mrs. Cowling: There was an announcement made under the Community Futures program for youth entrepreneurship, and there were dollars set aside for that, so there is also that incentive to get young people involved.

The Chairman: The last point I would make to you is that one of the results of the industry committee's study of financial institutions was their final willingness to provide statistical data on lending to small business. They now do that on a quarterly basis. It's broken down by region, by industry sector, by dollar amount, between term and operating credit, and it's broken down by institution.

That is a public document that I think your organization might want to monitor on a quarterly basis, because you'll be able to tell quite clearly whether or not capital is being withdrawn by chartered banks in your area or in a specific industry sector. To monitor that and to exert the appropriate public pressure once you see those trends I think would be an important tool for you.

If you need any additional information on any of those things, let me know and I'll be happy to provide them on behalf of myself or the committee.

Ms Bertrand: We appreciate that very much. I think there was a reference to the Community Futures Development Corporation program in our study. It's very similar. The ADEL pilot project that we referred to in our brief in fact is very similar.

One of the comments we are getting, and that's probably one of the ultimate problems with the micro-financing, is that there is as much work to be done to evaluate a project worth $50,000 as with one worth $300,000 or $500,000. That's where we're getting into a real snag. We don't know how to deal with that.

The Chairman: That's the reason for the community credit project, where the bank used an existing delivery vehicle that was designed for small loans.

By their own admission, they're not equipped, and they're not equipped because they make no money doing it. They lend in small chunks. Therefore, they're seeking out delivery vehicles that are designed to do that. They flow their capital through that.

Community Futures Development Corporations are designed to lend at the smallest level, as it is now with the Business Development Bank in that specific program. They're bringing in lending officers who have the knowledge to lend to that part of the market.

.1100

If you take a $50,000 deal to somebody who is used to putting $1 million deals together, they just throw it off the table and put it at the bottom of the pile, which my colleague has experienced first-hand.

Ms Bertrand: We appreciate your comments, and if we do not have this at hand, we'll certainly - .

You're Mr. Mitchell?

The Chairman: Yes, I am.

Ms Bertrand: Have you provided us with your business cards yet?

The Chairman: I'm sure my colleagues will be happy to, and I will, too. We'll give them to the clerk and we'll make sure you get them.

Thank you very much for your testimony. You've provided a lot of information, stimulated a very interesting conversation, and dealt directly with some of the challenges that are facing rural Canada. We appreciate that.

Ms Bertrand: Merci beaucoup.

The Chairman: I'd like to call on our final witnesses before lunch, Monsieur Pelletier and Monsieur Clavette from the Northwest Industrial Commission. Welcome, gentlemen. Perhaps you'd like to introduce yourselves and make an opening statement, and then members of the committee will go into questions.

[Translation]

Mr. Gérald Clavette (President, Comité de la Grappe industrielle, Forestry Sector, Northwest Industrial Commission): Thank you, Mr. Chairman.

I'm Gérald Clavette and I'm president of the Comité de la Grappe industrielle, Forestry Sector, for the Northwest Industrial Commission.

Mr. Réno Pelletier (Director General, Northwest Industrial Commission): I'm Réno Pelletier and I'm director general of the Northwest Industrial Commission. Today, I'll simply help Mr. Clavette with his presentation. This presentation was prepared for the Grappe industrielle and will be delivered by Mr. Clavette. If you have any questions I might be able to answer, I will do so with pleasure.

Mr. Clavette: As I was told that it might not be necessary to read the brief, I'm thinking of summarizing it in five minutes or reading the document because I have to warn you that it was not translated.

[English]

The Chairman: Perhaps you could give a five-minute summary and then we could go into questions, if that's okay with the committee members.

[Translation]

Mr. Clavette: Fine. So I'll try to summarize the broad outlines of the brief and especially address the objectives that we have tried to attain as compared to the directives in the document you sent. In this document, there were 15 or 16 questions we have tried to answer.

First of all, I'd like to familiarize you with our northwest New Brunswick region. As you know, we are here at the junction of the northwest boundaries of New Brunswick and the southeast boundaries of Quebec. We border on the Témiscouata and Kamouraska regions in Quebec and right beside us, we have the St. John river that is the border between us and the State of Maine.

Population-wise, one hour's travelling time by road around here, there is a basin of some 120,000 people, 60,000 of which are in the northwest of New Brunswick including the Restigouche and Victoria region as well as 30,000 people near the border with the province of Quebec and 30,000 to 35,000 more in the State of Maine.

.1105

This information might help you to a better understanding of the brief you received.

I would also like to say that we would wish to see your committee encourage the federal government to commit itself to develop or at least maintain rural regions. I think that should be part of your terms of reference. It would also be useful to define what is meant by rural region because it can sometimes be very subjective.

Personally, I come from a community of 2,000 souls which is doubtless a rural community. However, if we consider Edmundston which is nevertheless a regional metropolis of 10,500 souls, maybe we could then talk about an urban region.

On the other hand, for someone living in Toronto or Montreal, our region's population isn't even the size of Toronto. Everything is very relative and for that person the whole region of the Atlantic provinces is a rural region. That's why we have to agree on the terms to define a rural region. According to Statistics Canada, a rural region or an urban region can have a population of anywhere from 5,000 to 10,000 people and we see things in that context.

As for the Grappe industrielle-forêt, I'd like to say immediately that the Northwest Industrial Commission, a year and a half ago, went ahead and consulted the region's population to attempt to define its strategic plan for the next five years. The results of this consultation allowed the industrial commission to define six sectors or grappes industrielles one of which is the forestry sector of which I am the committee's president.

The forestry sector is, without a doubt, the most active and most important one for the whole northwest region of New Brunswick and also for the whole of the province. I should also say that the forestry sector, of all our natural resources sectors, is the most important for Canada also. Actually, the document I have tabled will show that.

For example, for balance of trade purposes, forestry sector exports are worth 21.5 billion dollars.

In comparison, the agricultural sector is worth about $620 million, fisheries account for$1.5 billion and mines bring in $11 billion. All these figures are in the document.

All this to show you that the natural resources sector is important for the maintenance and development of our communities. However, and you can see this in the statistics I've given you, even if, historically, Canada is full of natural resources, those traditional sectors of activity can't provide enough jobs anymore because of technology and mechanization. On the one hand, thanks to technology and mechanization we can consume more of those natural resources but, on the other hand, those sectors don't provide or create the same jobs as 40 years ago.

The document contained some statistics. Some 40 years ago, the traditional forestry, agriculture, fishing and mining sectors accounted for between 17 and 20% of our jobs in Canada. At the moment, these same sectors account for barely 5% of all jobs. I think the same holds true throughout the Atlantic provinces. Thus, even though consumption is higher generally, and even though we do more processing of our natural resources, these sectors are not creating jobs because of technology and automation.

.1110

The fact that these natural resources do not create jobs anymore plays an important role with respect to certain demographic facts. The fact is that even if they want to, people cannot live in rural areas because there are no jobs there. These people leave the rural areas to go to places where they can find jobs. Statistics show that 40 years ago, the entire service sector accounted for about 1.9 million jobs in Canada. Today, the service sector, from the McDonald's employee to the insurance salesperson, represents approximately 9.7 million jobs in Canada. They are located mainly in our urban centres and regions.

We therefore face a major challenge in trying to reverse this move of people out of rural regions. Unfortunately, despite the wealth of our natural resources, rural regions are not creating jobs at the same rate as they did 40 or 50 years ago.

The only way to compensate for this situation is to protect the natural resources we have left. Our natural resources today are no longer as abundant as they were 40 years ago. We need only look at the fishing, forestry and mining sectors to realize that these resources are not always renewable. So we have to do some further processing and add value to try to increase the jobs in these regions and keep rural communities as active as possible.

The forestry sector is a very active indicator of job creation activity and the Canadian GDP in a province like New Brunswick, and even in our region, where, generally speaking, 15% of all jobs are dependent on the forestry sector. The forestry sector also accounts for 40% of the jobs in the manufacturing sector in our region. However, I would emphasize that because of new technologies and greater automation and mechanization, the declining trend exists, and these facts I've mentioned will not be enough to turn it around.

The other question is about value added in research and development. Although I don't have the figures, it is a well-known fact that the amount of the budget earmarked for R and D in the natural resources sectors is 10 times lower than the amount set aside for R and D in the sciences, drug products, and other areas.

I refer to this problem faced by the forestry sector in the paper. Consider all the equipment used at the moment in the forestry sector - such as chain saws, strippers, skidders, the multipurpose machinery and even motors in our plants. Much of this equipment comes from Sweden, Finland and Germany. However, and you can see this from the charts, Canada has always been the largest exporter in the forestry field. So I'm wondering why we never invested more in research and development in this area to ensure that we would not just be a supplier of raw material, but also benefit fully from the related technological development.

.1115

In some ways, we must all take some responsibility for this situation.

In the past, we were simply satisfied with the fact that we had abundant natural resources and we did not invest enough in R and D in these traditional sectors. And now, we find we are somewhat lacking in the area of technology. Even though we have an advantage as regards our resources, we have certainly fallen very much behind compared to some countries that invested more in technology.

In closing, I would say that even though the federal government seems to be well-intentioned about the objective that we have to maintain or revitalize our rural communities, we must nevertheless acknowledge that on the eve of the year 2000, we are in a new economy and that the trade barriers and restrictions that could have protected these rural regions can no longer exist.

Under NAFTA or GATT, it will be much harder to make our rural regions more active than they were in the past.

I don't mean that the federal government's talk about rural development is all motherhood. The intentions are certainly good, but we are now living in a global economy with global markets, and we do not necessarily have any control over the factors that influence this type of decision.

[English]

The Chairman: Thank you very much.

Monsieur Deshaies.

[Translation]

Mr. Deshaies: Mr. Clavette, you say you live in a community with a population of 2,000. In our area, Abitibi-Témiscamingue, we would call that a small village. Abitibi-Témiscamingue is also a forestry and mining area.

Since you are president of the forestry section, you are well aware of the influence of the markets, of CAAFs (timber supply and forest management agreements) and the problems related thereto. It is becoming increasingly difficult for small businesses to get CAAFs or other ways of opening new sawmills and other small businesses. In fact, there is not even enough lumber to supply new sawmills.

You also say that free trade and all sorts of factors mean that even if people try very hard, it will be very difficult to bring the service sector into small communities. You may have experienced this in your area, in your small village, where there may no longer be any large stores, because everyone goes to shop in Edmundston, and there are no longer any business possibilities in the village.

I've seen that in our area as well, but I'm not sure there is any way of stopping the process and causing the village to grow again. It is true that the situation is less appealing in these areas, that young people are leaving and that there are fewer people living in these rural areas. However, as we've heard, there are some very good ideas around. I think that in the future, there will be people who will build things up, and although they may have fewer resources, they will certainly use them better.

Aren't there people in your community who think that something must be done to put a stop to the decline of the village?

Mr. Clavette: I hope I haven't given you the pessimistic idea that rural Canada is finished. But we must be realistic.

.1120

It is true that rural communities have been developing for about 80 or 100 years. At the moment, the procedures in place are no longer what they used to be, particularly as regards the government. I'm not saying that we cannot protect and even stimulate rural regions. The prosperity of a region or even of a country - and I repeat this and I have read some material on the subject, is something that is created. It is not something we necessarily inherit. The fact that there are natural resources in a country does not necessarily mean that we will inherit prosperity. People have to develop the resources and be innovative in their approach.

These days, because of what is known as the war on the deficit, the trend toward deregulation and the trend toward reduced transfer payments accompanied by increased responsibilities for small municipalities and individuals, governments are withdrawing from their traditional role and actions or what was known as the welfare state.

What frightens me about this new vision of Canadian federalism if that the most remote regions and the poorest regions are going to be forgotten about. At the moment, there have been cuts to transportation subsidies, which are an important part of regional development. There have also been reductions to equalization payments. Look at what has happened in the last five, six, seven or eight years. I think we have to look at the issue of the future of rural Canada.

The only thing that might help, and I mentioned it in my paper, is a greater solidarity among the regions. Here again, there are no guarantees. Whether we like it or not, we do need some help or at least some structures that will allow us to -

Money is not necessarily what we need. The government must create a certain climate. There are a number of factors that contribute to the prosperity of a region. The government's role is to promote opportunities in the area of manpower training, for example. There are many structures that must be established or preserved in the regions to make sure people stay there.

Mr. Deshaies: I think everything you've said applies to our region as well. There is a good reason why regions have often called for help. They claim that people come north to get their natural resources, and then go back to the south. I don't know what people say here, but in our area, people say that the wealth moves from north to south, and very seldom in the other direction. In mining, we had some luck, because we export mining technology. We also managed to develop technologies in Africa and South America.

In the forestry industry, on the other hand, we buy everything. No one has ever been smart enough to manufacture the machinery used in sawmills, and so on.

I'm nevertheless convinced - The witness who preceded you was saying that because of the closing down of the fishery, some people here have their backs to the wall, and that the future does not lie in that sector. Until the plant reopens, they're going to have to do something.

I hope I still have the naivety of ``youth''. Young people take charge of situations. I'm not saying that your testimony was pessimistic. On the contrary, it was very realistic. I think the committee's objective is to collect all the positive creative ideas we hear and put them together to build a feeling of solidarity. Regions do not necessarily want handouts. Rather, they want the tools they need so that they'll no longer have to ask for handouts. That is my point.

Mr. Clavette: The potential exists. However, if I look at the forestry sector at the moment, I would have to say that the resource is certainly limited as compared to the potential market.

.1125

We have to take the resource we have at the moment and add to its value. To do this, we need research and development. That is where we have some catching up to do, because in the past, we used our resources without ever thinking that some day we would reach the point we are at now, even though the resources are renewable.

That does not mean that there are no other sectors to develop. I know Mr. Pelletier could add something on this. What we're trying to do is diversify the region's economy. In addition to the forestry sector, we have agriculture, we don't have fisheries or mining, but tourism is growing all the time. There's also the textile industry. So we are trying to develop other areas of our economy.

In order to attract businesses to a region like ours, we do have to maintain certain basic infrastructures. If they're not maintained by these various levels of government, everything falls to the local community. The example I would give is the federal government's withdrawal from regional airports. If we are to maintain our regional airport, there's no doubt that at some point local communities will have to provide some money to keep it going. Otherwise, they should close it down. The same is true for many other services.

The rail transportation system or the air transportation system were maintained by the federal government. Now it is withdrawing from its obligations, and they are falling to the provinces and sometimes even the regions.

[English]

The Chairman: Thank you.

Bob.

[Translation]

Mr. Ringma: I think that in Canada we are right in the middle of some major changes, certainly in rural areas and as regards natural resources. You have sketched a picture that shows that we are losing jobs in industries related to our natural resources. At the same time, there are more potential jobs emerging than there were in the past.

Most of them are located in the regions in which the natural resources are located. You gave the example of chain saws that all come from Sweden, Norway or Japan. We missed a wonderful opportunity there. In all other areas, whether in research or development, there is a great deal of potential. And the situation has been further improved with the electronic highway, and so on.

So you see some changes in the federal government's role. It is not just to provide money, but to encourage research, and to encourage people, like those in northwestern New Brunswick, to work in certain fields.

Can you tell me whether you share the view that changes are underway and if we were to take advantage of the potential, we could have even more jobs, or, at the very least, the same number of jobs?

Mr. Clavette: There's no doubt that more jobs could be created in certain sectors as a result of research and development. There are a few such sectors. Production is sometimes easy, but in all fields, marketing expertise is required, because of market globalization.

.1130

Until now, the economy in our region was such that young people or small businesses started with barely two, three or five jobs. That is fine for a fairly limited domestic market. But everyone acknowledges at some point that no business can have just four or five employees in a particular production sector, particularly in manufacturing.

So we have to broaden our horizons and go after foreign markets. Statistics show that New Brunswick and the entire Atlantic region are now part of a world market. Most of what we consume in Atlantic Canada comes from outside, and our production is sold on outside markets. That is quite an exceptional phenomenon. That is the economy of Atlantic Canada at the moment.

We live off our exports; 70% of our production, and even more in some sectors, is exported. We have to continue seeking out new markets, so that our small businesses can grow and so that we can create the jobs we need.

Mr. Ringma: I learned a new word in English from one of our witnesses this morning. He used the word ``glocalization'' which is a combination of ``global'' and ``local''. He put the two together and I think that is exactly what we are doing. It is not easy. Thank you.

[English]

The Chairman: Mrs. Cowling.

Mrs. Cowling: Thank you, Mr. Chairman.

You indicated in your presentation that there have been massive changes in rural Canada. There have been changes to the transportation system, and there has been the removal of subsidies in many areas. I come from western Canada. My home province is Manitoba, and we've witnessed that as well.

However, on one hand, as a committee, we have been hearing that the government should sort of get out of our face, not be around, not be there. On the other hand, I think we have heard a very strong appeal for a federal government presence that would help rural communities in Canada through this transition we're going through.

I would like to hear your comments on that and on how we can help you help us move through this transitional period so that we in fact can see the revitalization of rural Canada for rural Canadians.

[Translation]

Mr. Clavette: I think the questions you ask in the paper you sent us certainly focused our answers and helped us to find the solutions you are exploring at the moment. With all the changes going on in the world, with market globalization and international agreements such as GATT and the Free Trade Agreement, we are living in a new economy.

Rural regions have had difficulties in the past and still do. The federal government seems to have a new approach which is to withdraw from various sectors of activity. I'm afraid that if this continues, during the current transition period, rural regions will not have the resources they need to remain viable.

This leads me to say that traditional sectors such as farming, forestry, fishing and mines are not creating the jobs we need, at least not at the moment.

.1135

Consequently, rather than remaining in these regions, particularly with the changes to employment insurance, people will be fleeing out of rural regions into urban centres.

The federal government should be looking at the following question: what will be the economic and social cost of integrating these people from rural regions into urban centres? Wouldn't it be preferable to try to set up research and development programs to create jobs in rural areas so as to increase the value of by-products or create new products in traditional centres?

That's my view. In addition, as has doubtless been mentioned before, investment capital must be equally accessible to rural regions, whether in the context of federal programs or through our Canadian banks. For example, the Canadian banking system could earmark a certain percentage of its profits for rural regions.

Here's another suggestion. We could consider reinvesting the four or five billion-dollar surplus we are accumulating in the employment insurance fund, not necessarily in the same way as in the past, but in rural regions to make businesses there more viable.

In any case, if we don't have an overall approach and try to do something, either through policies and legislation - Money is not the only thing we need to succeed, but in the transition period, we will definitely require some money.

The government must consider that it might be more expensive to completely abandon rural communities and to absorb all these people into urban settings. How much would the new infrastructure required by these new residents cost, and much would their standard of living drop? That is the issue.

[English]

Mrs. Cowling: Mr. Chairman, I think it's quite fitting that the October 28, 1996, issue of Maclean's talks about cashing out and why thousands of Canadians are leaving the fast lane behind. I don't know whether you have had an opportunity to read this, but it brings to mind what I believe rural life is about, in its quality of life, its peacefulness, its remoteness, and there's a sense of community.

Do you think that as we move towards change, areas such as this will have these types of people moving in to get away from the fast lane? I guess what I'm asking is whether we should be looking at rural Canada from a perception of building the infrastructure so that there are initiatives here that will attract these types of people who want to get away from that fast lane - perhaps tourism and infrastructure.

[Translation]

Mr. Clavette: In my text I tried to show that we were not talking about infrastructures only. A region's prosperity and positive attitude is created by the people who live there. Regardless of the natural resources we may have, our most important resource is people.

.1140

In its wisdom, the federal government is trying to decentralize some services and responsibilities. It should ensure that we are well-prepared, competent individuals who can provide assistance or leadership in rural regions move their offices to our regions so that we have a critical mass of expertise. I'm not saying we don't already have some. However, if we are to develop in the areas of research, development and entrepreneurship, we need a critical mass of people with leadership skills to create the environment necessary for rural development.

I'm not necessarily saying that rural regions are a lost cause. However, I am saying that if the various levels of government do not take some concrete action, given the trends we have talked about, whether we like it or not - Let's look at how Edmundston has developed in the last 30 years. In 1961 or 1962, the city had 12,600 residents. In 1971, its population was approximately 11,000. At the moment it is 10,500. So it has lost 2,000 inhabitants over the last 20 years.

I'm thinking of the Madawaska region, where the same thing is happening. If we look at the region as a whole and the definition of rural regions I gave a little earlier, there's no doubt that the population has dropped compared to Moncton, Saint John or Fredericton.

The same thing is going on throughout the country. I heard a presentation about electoral maps a little earlier. We're talking about demographic weight. Demographic weight or power is also a political decision-making weight. That too is important.

If people leave, rural regions will no longer have the critical mass or demographic weight they require. If the government wants to maintain our regional communities, it will have to intervene in one way or another.

[English]

The Chairman: Mr. Clavette and Mr. Pelletier, this is going to be more in the form of a comment than a question.

You made a point at the beginning of your presentation, and I think it was an important point. I'm just going to expand on it. You mentioned that it is impossible to create an artificial situation in rural Canada and that people in rural Canada face the same challenges as everyone else in Canada, whether you live in Toronto or here. The government needs to deal with its deficit. We're operating in global markets, and we have to develop our human resources. All of those are challenges that we can't avoid in rural Canada, even if we would like to. Those are the realities of the world.

But what is important, I think, and what this committee is trying to move towards, is that the application of the policies that a government - in this case the federal government - undertakes to deal with those challenges needs to be different in rural Canada than in urban Canada. It's not that the challenge is different - globalization is a reality that we can't change - and it's not that the federal government needs to deal with the fact that we're operating in a global market, but the policy prescriptions that are developed for dealing with that are going to be different for the manufacturers who operate in Toronto or Vancouver than they are going to be for the natural resource sector that operates in rural Canada - the whole issue of rural Canada.

It's that which this committee is moving towards. It's trying to come up with the specific prescriptions, not to create an artificial world in rural Canada, because that's impossible and would be doomed to failure, in my opinion. But we should apply the policies that we're going to develop to deal with these national challenges in a way that is tailored to the needs of rural Canadians and our rural communities.

[Translation]

Mr. Clavette: I don't remember exactly which question I was answering in the text you have. Let's look at the various approaches the government has taken over the last 30 years. I think it was around 1966 or 1967 that there was the ARDA program, which stood for Agriculture and Rural Development Agreement. It applied specifically to rural regions.

.1145

Other programs followed, under names such as DREE, FRED (or FODER in French) and even ACOA, which still exists at the moment. They were not really geared to rural regions, unless the people in Ottawa, Toronto or the major centres see all of Atlantic Canada as rural. I come back to my initial definition; if that's rural Canada, then we should agree on our terms.

The first actions of the federal government in the 1960s, which were called the ARDA program, were for rural regions exclusively. But what happened then could happen again. Individuals or companies located in urban areas, which have the demographic weight, will feel they are at a disadvantage compared to rural regions. They will simply say that the government's program creates an imbalance between supply and demand. I don't know how the government can overcome this problem.

You are telling me what people think about programs that are designed specifically for rural regions. Those criticisms are probably the same as those made by people living in central Canada about programs designed specifically for Atlantic Canada or the North. There is a feeling that equalization payments, and the subsidies the government has given to Atlantic Canada have caused an imbalance in the national market.

[English]

The Chairman: There are some in central Canada who feel that way, but not all, thank goodness.

Thank you very much for your testimony. We very much appreciate your taking the time and being patient, because I know we were running a bit behind. Thank you. We appreciate it.

We stand adjourned until 1:30 p.m..

Return to Committee Home Page