MR. CHAIRMAN: I will call the committee to order. We have two hours, as everyone is aware, so we are just about on time. I would like to thank, this morning, the witnesses who we have with us: Mr. Gordon MacDonald from Guysborough County Regional Development Authority, good morning; Mr. Rankin MacSween from New Dawn Enterprises, good morning; and Dr. Greg MacLeod from Tompkins Institute at UCCB. Gentlemen, the way that we have been proceeding is we take the presentations first and then the committee members will direct questions to any one of the presenters and we just go through that way. We divide up whatever time is remaining after the presentations among the caucuses and try to divide it out fairly so that everybody gets an equal amount of time to ask questions.
Mr. MacDonald, we were going to start this morning with you and I understand you have a presentation and some technology there.
MR. GORDON MACDONALD: Good morning. I would like to, first of all, thank Chairman Dexter for extending the invitation to meet this morning. When Darlene Henry first called to ask if I was interested in addressing the committee regarding the work that you are undertaking in relation to Devco, I admit, I guess, initially I had some reservations. The reason for my reservations was related more to my lack of knowledge of the issue. I don't pretend, really, to understand or fully appreciate the ramifications of the closure of the mines and the adjustment related to the closure.
I am not from Cape Breton but I do have some Cape Breton roots. My mother is from Framboise, so I guess maybe I am part Cape Bretoner; although a friend of mine from Cape Breton, when I mentioned that to him one time, he said there is no such thing as a part Cape Bretoner. You are either all Cape Bretoner or not at all.
As I discussed my participation with Darlene, I thought of areas that I might be able to make some small contribution without pretending to be an expert, certainly, on the issue. So what Darlene took back to Chairman Dexter, which was deemed acceptable, was to speak more on a topic that I do know a little bit about and that we probably have some similar experiences, and that is in retooling the economy of Guysborough County.
When you look closely, there are a great deal of similarities between Guysborough County and Cape Breton. These similarities go well beyond being simply neighbours. Our economy has, for the past century, been linked to the resource sector. Initially, back in the early 1800's, it was gold mining and at that same time fishing certainly, as well, and forestry. Those industries have remained the backbone of the economy of the county. These resources have, for the most part, been exhausted and the impact of the resources has been diminished.
The unemployment rate in Guysborough County reached 35 per cent in February 1996 in a rather detailed analysis that we did that was county-wide, household to household, so that was kind of indicative of what the real unemployment rate was. I think at that time using HRDC numbers, it was around 26 per cent or 27 per cent. So there are similarities, certainly, that go beyond just being neighbours combined with this high unemployment rate, is a very high out-migration rate which, in 1996, was the highest of any county in Canada. I think you have to qualify that somewhat because Newfoundland doesn't use the county system. Some communities in Newfoundland certainly had a higher rate.
Our population has declined by 30 per cent since the turn of the century. Our young people have come to accept the fact that upon graduation from high school, their future would not be in Guysborough County. Regionalization has meant an outflow of government services from the county to new regional centres. The social security system has become somewhat of a trap which people could not escape because of the seasonal nature of the jobs. Guysborough County families had the lowest annual household income in the Province of Nova Scotia and there has been a litany of failed attempts by government to deliver on even the most basic of infrastructure investments in the county.
Politics has been an enemy at times. The Guysborough railway was abandoned in the 1920's, even though it was 85 per cent complete. Our communities have become so accustomed to competing over scraps that parochialism has permeated all decisions. Hopefully some of this may sound familiar and have some link to what we are talking about today, and that is the context in which I would like to frame the presentation today.
We, in Guysborough County, have bottomed out. I think the resolve of the people, to a large extent, has been beaten out of them over the last 50 years to 60 years. Many have moved on. In the midst of this evolution came an opportunity to make a fundamental shift. In 1995, interest was again renewed in the offshore resources, in the Scotian Shelf. The effort of the community, and the resulting decision of the Sable Offshore Energy Project to select
Goldboro, has rekindled the spirit of a community that has been prodded, analyzed and studied like a culture swab for generations.
There is now a willingness to change our approach, which has clearly not been working. The starting point for us was in recognizing that change had to start within. We could not rely on government to answer all of our prayers for us. Times have changed and fiscal realities dictate that the role of government must be in providing the conditions and business atmosphere for economic growth.
We recognize that the petroleum industry is a non-renewable resource as well; however, if we manage the growth well, it can fundamentally change the business case of the county and we are seeing evidence of that now. Hopefully that will have a positive impact on the infrastructure improvements in the county whether they be highway, rail, telecommunications, recreational and educational services, as well as service sector growth.
Not everyone in Guysborough County agrees with our approach. There are always diverging opinions in terms of strategies for economic growth. There are often private agendas that come into play, as well. There are sometimes examples of agendas that profit from assuring that your economy does not grow, and we have also seen evidence of that.
I would like to concentrate on what we saw as the most important issues in charting a new course for our economy. Again, you have to recognize that a fundamental shift is required in our instance. Given the global nature of the world economy, the leaders within our county, for the most part, came to the realization that unless we were satisfied with being nothing more than a huge tract of uninhabited wilderness, that we have to institute some change. We certainly recognize that this cannot happen without a buy-in of the community.
When we accepted that government was not going to force business to locate in the county, we began to look at the areas that would be attractive to investors and build the business case. We have clearly targeted the petroleum industry as the basis upon which we need to build our economy.
The second important issue that we have been building upon is strategic partnerships. We recognize that we really could not achieve any level of success without partners. Partnerships and alliances would be crucial to building our business case. Given the known challenges we faced, the identification and recruitment of partners sharing our vision would enhance our credibility in dealing with investors. By definition, partnerships must be mutually beneficial or they are not true partnerships.
We learned through our relationship with the Sable Offshore Energy Project proponents that a level of trust is crucial and mutually beneficial. We have certainly had our differences with the Sable Offshore Energy proponents over the past five years, but we have
made a conscious effort to ensure that these differences were resolved in a professional manner, face to face, and behind closed doors.
Some examples of partnerships that have worked well for us include, in the transportation sector, we recognized that rail was going to be a very important issue. We were looking at two primary industrial nodes within the county and through the Cape Breton-Nova Scotia Railway and Railtex, we have built a solid partnership; they have participated with us in a number of areas, whether it is in marketing, and beginning some of the work at root analysis into the Melford and Goldboro areas.
What we did recognize as well, and the only reason they are willing to enter into a partnership, was that we did not take the position where we wanted them to build the railway in the hopes that industry would come. Our approach was more of signing an MOU with them and working jointly toward pursuing the industry and then when industry created the business case for them to make the investment for the rail, that they would do so.
The second issue that we recognized would be crucial to establishing the business case was the labour component. Through the construction of the gas plant in Goldboro, Guysborough County tradespeople have demonstrated their ability to produce quality work in a variety of trades. We never had, in terms of industrial development in the county, much of a union presence. When we looked at the carpenter trades, in 1995, we had three carpenters in Guysborough County that were members of the trade union; now we have 38. That is almost across the board that the membership has risen dramatically. A lot of these people are now working on construction projects in Pictou County and they are working throughout the province.
We have built a rapport, as well, with the business agents. It has led beyond just the sharp increase in membership from the county. This partnership, I think, positions the county well in terms of the long-term industrial development. The union has really recognized, and are attempting to adjust to, the development of the economy here as well. They are looking, in a much more positive frame, at the long-term prospects. They are recognizing now, more so than ever, that if they do a good job on this particular project, the likelihood is that there will be another project, and another and another. So, they are looking more at the bigger picture and recognizing the long-term opportunities.
Recently, the Mainland Nova Scotia Building and Construction Trades Council accompanied us to the Offshore Technologies Conference in Houston; I know a couple of your committee members were down as well. It recognized the fact that this partnership with the trades was a little bit unconventional, and was viewed in very positive terms by investors internationally. They like to have some comfort in making an investment in an area, and that partnership was really a worthwhile one for us.
The other one, certainly on the education side, we have had a couple of partnerships that have worked well. The Survival Systems Industrial Training Centre, which was established recently in the county, was a partnership between ourselves, the Strait Regional School Board and Survival Systems. Previous to this, there had been no post-secondary training institution in Guysborough County. I think we were the only county in the Province of Nova Scotia that had no post-secondary training institution. So we now have a reputable company in the county that positions us well as the industry starts to develop in the province and in the county.
The other important partnership was certainly with government and the very important role that government has to play in the development of our economy and that of the province. The first one was with the Department of Transportation. Again, similar to the railway, I think the province wasn't in a position to come in and invest significant amounts of money in highway infrastructure prior to development. So the approach that we have taken, first of all, is working closely with the Department of Transportation at the committee level, so at least there is a recognition there of what the needs will be and what the industrial interest in the area is presently.
Secondly, with the Petroleum Directorate, we worked extremely closely with that department and tried to coordinate our activities in a manner which meshes with that of the province as well. We have made a conscious effort not to make unreasonable demands there as well.
The next issue for us, which we knew we had to deal with, was the image that Guysborough County had. For a century we have been, I think for the most part, viewed as hewers of wood and drawers of water in the county and that has been difficult to overcome. There are certainly a lot of preconceptions and misconceptions held outside the county. We wanted to address these head-on.
There were questions about the skill sets available to meet the needs of industry, so we developed a skills inventory database that is probably the most comprehensive in Canada. The results of that have been evidenced through the employment on the Sable project, both on the construction phase and on the long-term operational positions as well. Over the last year on average, 160 of the 500 workers on-site have been from the county. The long-term positions, the operation associates, which are the more lucrative positions, we have done quite well in as well. Presently, 21 out of the 75 individuals hired are from the county. I think there is a likelihood now, because of the degree of pleasure on the Sable Offshore Energy Project side with the local individuals, that more will be hired. There is a tendency, initially, that they will move in some people with a fair amount of experience and those individuals will move on to other projects over the next year or two. So building upon these successes is critical.
The pervasive negative attitude which we had become accustomed to seeing, which often became, really, a self-fulling prophecy, is beginning to dissipate. So I guess the thing
there is that we felt from an image perspective, if you can't demonstrate confidence in your own region as a good place to invest, then why should an investor?
In terms of impediments, the major impediments in our experience have been more local in Nova Scotia and Guysborough County than in the bigger picture with investors. There are still communities of interest vested in resisting change and for our economy to develop we certainly need the support of government, and that's all levels of government: federal, provincial, and municipal.
What has changed for us with the development of the petroleum industry in the county is that we now have the business case to warrant investment, which we have not had previously. We don't expect this investment by government in advance of development; there is certainly a much different situation than what exists in industrial Cape Breton. Probably one of the real advantages in industrial Cape Breton is the infrastructure is much better developed to serve the needs of industry.
Other potential impediments to development include the available trained labour force, available housing and strain on municipal resources to complete the necessary planning. More than anything else, however, the major impediment we face is attitudinal. For Guysborough County to witness significant in-migration, our educational, cultural and recreational facilities must be enhanced. The recent P3 announcement for Guysborough County will go a long way towards addressing these needs, as well, with the recreational, educational and cultural focus that that will have. Investors are interested in locating in communities where a majority of civic, business and religious leaders have a progressive attitude towards business and industry.
In terms of strengths, there is nothing to be gained by concentrating on the things that had been beating you down. To achieve any degree of success in developing our economy, we have naturally concentrated on our strengths. The development of databases to support and promote these strengths has been very useful. These databases include, as we mentioned, the skills database, our coastal mapping project, accommodations database and various economic indicators useful in tailoring our message to investors. It has been a gradual process to get to a point where people are talking in positive terms about the future.
The other issues which we can now point to as real strengths include the positive local investment climate established through the Sable project and our location. For years our location was our biggest detriment. We simply did not carry that much weight, certainly in Halifax, and probably still don't carry a great deal of weight in terms of the provincial economy; however, as industry continues to grow, our location at the centre of the petroleum industry positions the county well.
We naturally feel, as well, that for us - and it may sound kind of self-serving - the community economic development process is one that we feel has worked well in Guysborough County. This is an experience that dates back some 25 years and the evolution
through a regional development authority process has certainly benefited from a high degree of public participation. We have 120 people serving on various subcommittees and our approach has been one that has been built on partnerships; whether we are dealing with private enterprise, government departments, media, elected officials or the local community, we attempt to leverage progress by working towards common objectives while taking care to gain their confidence and respect.
Our approach, as well, we have tried to ensure that we work on a non-partisan basis. We made a conscious effort to meet with all three caucuses and discuss the goals, objectives and needs of the county. I think given the current situation in the Province of Nova Scotia, that is absolutely critical as well.
While government has a very important role to play and can put policies in place to encourage development in areas of particular need such as Cape Breton and Guysborough County, the driving force behind new economic growth will be private investment based on solid business rationale. As an organization benefiting from significant volunteer contribution, this tri-partisan approach is critical to retaining public involvement as well.
In looking at the horizon, we foresee a great opportunity in Nova Scotia and in Guysborough County. These opportunities will be different from those that previous generations have experienced. For our community, this is certainly a time for real leadership, it is not a time to simply say what you think is popular. Any time you plot a course that identifies a fundamental shift, the impact that it has on people's lives is not easy. Decisions must be based on what is in the best interest of the majority of people.
[8:30 a.m.]
In the late 1800's and early 1900's gold mining was, as I mentioned earlier, the backbone of the local economy. When the resource ran out, small towns of up to 3,000 people ceased to exist and some of those ghost towns still exist in Guysborough County. Times have changed and economic trends have changed, largely through technological advancement. Capitalizing on the skills of the community to reposition the community to participate in the new economy will be key.
For Guysborough County, the development of the Scotian Shelf holds great promise for a future in the county. Similarly, Cape Breton has an opportunity to prepare for the development of the Laurentian Basin. There is a growing sense in the petroleum industry internationally that the East Coast of Canada, Nova Scotia in particular, is about to enter a period of sustained growth. I think for the members who were at the recent Offshore Technologies Conference, they could probably attest to that as well. The eyes of the world are now on Nova Scotia and on Atlantic Canada.
Backed up by all economic indicators in Canada, as well, this is a time of opportunity and we feel that the prospects will get better through time. But the growth will only happen and will only sustain our communities if we are a full participant in the process. If we take the position, generally, that we are in favour of development, given all environmental safeguards, then we must participate fully. That is a lesson that we have learned. We have a tendency, at times, as a community, to underestimate the impact that we can have on investment decisions as well.
Many of the benefits that we, as a community, enjoy today in relation to the petroleum development, are as a result of full participation from the community. The needs and desires of the community must be inserted in the process and, in our experience, that has been recognized both by the developers and by the formal hearings that were held prior to the sanctioning of the project.
By taking a logical approach and learning from the experience of others, the establishment of the community strategy is not difficult. It takes a reasoned approach formed by determining the manner in which the community will be impacted by the development, both positive and negative, and then determining the means of minimizing the negative and accentuating the positive.
When we appeared before the Joint Public Review Panel at the regulatory hearings for the Sable project, we insisted that as the community most impacted by the development, that the county must receive commensurate benefits. We determined that the best manner for Guysborough County to benefit in the long term was to have a preferential rate on the product itself, the natural gas. The result in approval of the Goldboro by-pass option provides the community with the business case for industrial development. We had been advised by virtually all prior to the hearings that the likelihood of success here was somewhere between slim and none but despite that, we persisted and when the Joint Public Review Panel came down with their ruling, it was viewed very positively, certainly within the county.
It is absolutely critical, in our opinion, to build support in the community for retooling the economy. If that support is not there, then the likelihood of success is not very good. Most investors interested in Nova Scotia do not rely on government for information regarding the local investment climate. When private investors investigate sites for development, they talk with private enterprise and companies that have made investments. This provides a much greater level of comfort to their shareholders.
If we are going to say Nova Scotia, open for business, we had better be prepared to back it up. We must be prepared, as a province, to develop the economy of the entire province, capitalizing on the assets found in communities from Yarmouth to Cape North. There are lots of living examples, like the Florida Ports Council which has capitalized on all ports in the entire state, not just on one, but looking at what can be gained by fully utilizing all the state's assets. I think Nova Scotia would be wise to follow that same approach.
That concludes my presentation. I would like to thank Chairman Dexter and the committee for the invitation to address the members today. I wish you, and more importantly the community, well in dealing with these issues which have such a significant human impact. I hope there are some points that may be relevant from our experience in Guysborough County. I indicated before, and I will say it again, in terms of any assistance that we might be able to offer because of our experience as Cape Breton possibly readies itself for the development of the Laurentian Basin, we would be happy to help in any way that we can, as well.
MR. CHAIRMAN: We will move on to Mr. MacSween.
MR. RANKIN MACSWEEN: Mr. Chairman, ladies and gentlemen. It is quite a day here in Nova Scotia. We have a budget, today, I understand, and I see on the front page of the Chronicle-Herald, one commentator suggesting that our budget is going to be the basis of an election. Whether that be true, I don't know.
I want you to know that before you this morning you have three people, and we are kind of like the Holy Trinity. Greg MacLeod is the founder of New Dawn, so he is like my father and Gordon has access to gas, so he is like the Holy Spirit and I am like the son. (Laughter)
I have a few comments that I would like to share with you. Mr. Chairman, if I could, I will move through this as quickly as I can. First of all, let me tell you a little bit about New Dawn Enterprises, the organization that I represent. It was founded in 1976, it is private, it is volunteer directed, it is not for profit and it is committed to community building. Its methodology is to identify community needs and then establish and operate ventures that speak to those needs.
At the present time, we are involved in the operation of nine companies. These include the Cape Breton Association for Housing Development, a real estate company that provides affordable apartments; Cape Care Services, a home care company that delivers care to seniors in their homes; Pine Tree Park, a former military base that has been revitalized and now is home to an array of residential and business activities; the New Dawn Guest Home, a residential care facility; Sydney Senior Care Home Living, a series of small options homes; Highland Resources, a registered trade school; the Volunteer Resource Centre, which coordinates the work of volunteers; Bras d'Or Technologies, a software marketing company; and New Dawn, itself, which functions as the development arm of the organization. Taken together, these companies employ approximately 175 people.
In relation to Cape Breton's economic problems, New Dawn's impact and accomplishments are modest. However, the fact of the organization's survival and its accomplishments, modest though they may be, constitute a small miracle. When we reviewed the sea of economic failures that have characterized Cape Breton, New Dawn's survival is
outstanding. The results of this small community development experiment stand as a testimony to the cooperative action, the goodwill and the perseverance of many volunteers who are preoccupied with Cape Breton's best interests.
On the basis of its work and reflections over the past 20 years, New Dawn has developed a particular perspective about Cape Breton, at least about industrial Cape Breton, its problems and its possibilities. My intention here this morning is to briefly share some of those reflections.
Cape Breton, at least the industrial part of Cape Breton, is best understood as a depleted community. It is depleted economically. The Island suffers from one of the highest levels of unemployment in the country. As well the Island is socially depleted. The Island's social infrastructure is much less than one would expect to find in a community the size of industrial Cape Breton, but perhaps what is most important and most significant is that the Island suffers from a psychological depletion.
For the past 100 years, industrial Cape Breton has been subject to off-Island control. During the first 60 years of this century, the Island's main industries, steel and coal, were owned and operated by companies headquartered off-Island. Our memories of this period are dominated by images of violence and the visual legacy of those times, environmental blight continues to be part of our daily lives.
Over the last 40 years, the Island has been subject to a variety of failed development experiments. While the proponents of these experiments and the companies that receive the benefits have long departed, the community continues to wear the consequences of these failed efforts. For 100 years, Cape Breton and its people have been witness to and subject to failure. Any community that time and time again is subjected to thoughtless economic development prescriptions, inevitably becomes suspicious of any type, kind and quality of leadership. Any community subjected to 100 years of broken promises is inclined to despair and any community forced to sustain 100 years of failure, inevitably begins to lose its sense of possibility.
By any measure, Cape Breton's economy is in an accelerated pattern of decline. In 1981, the population of Cape Breton County was 127,000. By 1986, it had dropped to 123,600. By 1991, the figure was 120,000 and by 1996, the most recent year for which figures are available, the population of Cape Breton County was 117,800. As well, according to 1996 data from Stats Canada, the economic dependency ratios of the region, that is the transfer of payments to individuals as a percentage of employment income, are well above provincial averages. Sydney, for example, has an economic dependency ratio of 39 per cent while the provincial average is 27 per cent; Glace Bay has a dependency ratio of 64 per cent while Halifax has a ratio of 18 per cent; and New Waterford has a dependency ratio of 68.8 per cent while Dartmouth's ratio is 16.9 per cent. Again, it should be noted that these are
1996 figures and by no means account for the impacts of the Devco announcement earlier this year.
Regretfully, Cape Breton does not have the means to gather and analyze the economic data appropriate to describing its circumstances and challenges. Therefore, we do not have an official figure for the level of economic activity within Cape Breton County. Our unofficial estimate is that the GDP of Cape Breton County is slightly in excess of $1 billion. The unofficial estimate of Devco's contribution to that GDP is $200 million to $300 million, which means that Devco represents the largest single piece of economic activity on the Island. The pending Devco closure means that we now face the prospect of an economic hit that represents 20 per cent to 30 per cent of the economy.
Over the past several months, it seems to be the fashion of certain business and media commentators to suggest that the Devco closure and the continuing decline of the Cape Breton economy is good. It is suggested that these difficult times will force the Island to forsake its pattern of dependency and embrace the private sector entrepreneurial strategy that will lead to economic prosperity. While I assume that these off-Island commentators are sincerely interested in our welfare, their prescriptions are as inappropriate as the prescriptions offered and implemented over the past four years.
We understand that the Cape Breton community must play the primary leadership role in determining its economic destiny. New Dawn, BCA Holdings and a variety of other community-based business development initiatives are modest examples of such community-driven leadership. The notion, however, that Cape Breton can somehow will itself to a place in the modern economy, seems to be predicated on the assumption that the Island is sovereign or at least has provincial status.
While serious discussions about the advantages of Cape Breton sovereignty in relation to its potential economic development prospects may be useful, the fact is, at the present time, the Island is part of the Province of Nova Scotia and notwithstanding that small sovereign islands tend to be economically vital, Cape Breton is still part of the Canadian family. Communities do not have access to the economic instruments available to either a sovereign country, state or province. Communities are subject to the economic development policies and practices of provincial and national jurisdictions.
It is interesting to note that Nova Scotia did not always have access to what we now consider to be the standard complement of provincial economic development tools. In the early 1930's, Harold Innis, the noted Canadian economist advised the Nova Scotia Premier of the day, Angus L. Macdonald, that the only means by which the province could counter, "the piecemeal solutions and contradictory policies" directed from Ottawa was to establish a modern provincial government. In 1935, the Macdonald Government enacted legislation to establish the Nova Scotia Civil Service. But just as Nova Scotia has always struggled against
the influence of a federal centralized power, Cape Breton, at least since 1935, has been forced to endure a centralized provincial power base.
As Cape Breton County experiences dramatic decline, Halifax County and every county that borders on Halifax County, excepting Guysborough, has experienced population growth. Every Nova Scotia county outside that Halifax circle with one exception has experienced a decline.
We do not begrudge the Halifax area its prosperity. Nova Scotia is a poor province and the Halifax region's important economic possibility must be nurtured. But understand that contrary to popular belief, Halifax's growth has not been divinely inspired. Halifax's economic platform includes the provincial Civil Service, four universities, provincial health centres, and the substantial presence of the Canadian military. The cost of this platform is borne by all Canadians. It must be emphasized that a key contribution to Halifax's economic platform is not only the federal and provincial Civil Service presence in the area but also that these Public Service bodies include many senior officials who have substantial influence in determining economic development perspectives and practices.
Generally speaking throughout Canada and the United States, the communities wherein the senior public officials work and live tend to be more prosperous than other regions and more economically vital. If tomorrow we relocated all the influential public servants that presently reside in the Halifax region to another Nova Scotia community, for instance Yarmouth, I am confident that within a short period of time Yarmouth's level of economic vitality would improve. This is not to suggest that any particular group of senior civil servants is deliberately acting to undermine development outside Halifax. Rather, I am speaking to a subtle but real human dynamic that ultimately works in favour of the Halifax region.
Let me explain it this way, businesses are sometimes understood as either retail operations or wholesale operations. In retail, location is critical and every retail operation focuses on serving a particular community or part of a particular community. In the wholesale business, on the other hand, the task is to service a large geographic area or a number of communities. The location of the wholesale activity is incidental. It is important to understand that governments are intended to function like a wholesale operation, that is serving the broad area under their jurisdiction. Often, however, the impact of government is predominantly retail. The impact of government favours the community wherein the government is headquartered.
Any economic development map of Nova Scotia would clearly demonstrate that as we move outside of Halifax, the dominant trend is economic decline. Industrial Cape Breton, which is the most populated area outside Halifax and one of the areas most distant from Halifax, is also the area experiencing the most intense decline. If Industrial Cape Breton is to
stop this downward spiral and find a new economic future, the community needs the assistance and support of the Province of Nova Scotia and the Government of Canada.
Over the past forty years, Industrial Cape Breton has learned, however, that assistance of the retail variety is ineffective. Industrial Cape Breton needs assistance which is wholesale in nature. Let me give you an example. If you are serious about helping to develop an economic plan for Cape Breton you must understand that capital investment is required. According to the traditional retail model, publicly-funded federal and provincial agencies and departments would be charged with availing loans or grants to the area. The level of capital investment required to bring Cape Breton County to an acceptable level of vitality, however, is in the range of $1 billion.
The Province of Nova Scotia cannot afford to retail $1 billion into industrial Cape Breton and certainly the Government of Canada does not seem inclined to make this level of investment. The provincial and federal governments, however, have the means through their respective taxation and monetary authority to influence the flow and direction of private capital.
According to the Nova Scotia Department of Finance, in 1996 within the Province of Nova Scotia, $615 million was purchased in RRSPs. The department further estimates that less than 2 per cent of that amount was invested in Nova Scotia. In other words, in any given year over $600 million in capital that is generated in the province leaves the province. We estimate that in Cape Breton there is in excess of $100 million in RRSPs purchased and then invested out of the province. It seems reasonable to assume that most of this amount finds its way to Toronto and is invested in southern Ontario, thereby creating wealth and employment in central Canada.
Last fall, the province implemented important and progressive legislation, which we would consider to be of the wholesale variety. This legislation enables community groups to attract investors using a provincial tax credit. While the impact of this initiative relative to the total level of investment Cape Breton requires will be modest, the province should consider this initiative a first step in a series of initiatives that would serve to encourage the flow of private capital to poor communities such as Cape Breton.
Although industrial Cape Breton is burdened with a difficult economic history and a set of despairing economic circumstances, there is infinite economic opportunity. The Island is a potential garden of high-tech, manufacturing, service and entertainment business enterprises that can be viable and wealth-creating.
New Dawn's daily frustration is that, because of their modest level of capacity, the organization must limit its development efforts to a handful of potential opportunities. New Dawn's lack of capacity is symbolic of the fundamental problem which bedevils Cape Breton. The economic potential of the Island is outside the reach of the community because it lacks
the tools, instruments and capacity critical to developing an economy. Industrial Cape Breton not only requires access to capital, industrial Cape Breton requires all the components fundamental to the construction of an economic platform. Industrial Cape Breton needs access to cheap energy, industrial Cape Breton needs a first-class education and training system and industrial Cape Breton needs innovative structures of local governance. Each of these components is beyond the means and the authority of the community.
Simply stated, industrial Cape Breton needs a long-term economic development plan. While the community must lead the planning process, the Government of Nova Scotia has the responsibility to ensure that a plan is completed and, once completed, is executed. Thank you very much, Mr. Chairman.
MR. CHAIRMAN: We will move on to Dr. MacLeod.
DR. GREG MACLEOD: You have the presentation. You can tear off the first two pages and throw them away because Page 3 is the edited version. So, just throw away those first two pages.
First, I want to agree with my colleagues. I think we have an agreement that there is a structural problem in Nova Scotia, a systemic disparity between a number of counties that have been doing very well and the rest that is depleted and dying. I think it is only in the last year that politicians have come out clearly and recognized this, that it is a built-in problem. I think it is extremely important to keep that context. I want to say that we are talking to politicians today. I think the politicians are starting to recognize it, but the senior civil servants in Nova Scotia still will not recognize this kind of problem. So, it is great talking to politicians, but it would be nice sometimes if we could have access to the officials because we bash politicians all the time, but in my experience, I found that in talking to politicians they seem to recognize something, but when you get into the system, it is a different thing altogether.
Formally now, I understood the key concern was the coal industry. I want to start out on coal in particular, distinguishing a big distinction that is not really made enough of. There are two parts to the problem in the Cape Breton area anyway: the future security for displaced coal miners; and number two, a future coal industry for Cape Breton. These things seem to be jumbled up together in most of the public debate and I want to keep them very clear; what do we do about the displaced coal miners and what do we do about the coal industry itself.
I am of the opinion that there is a future coal industry in Cape Breton, solid, business grounds for a future coal industry. In my hat here, I am university but I am a business person, BCA Holdings; I am former chairman and now vice-chairman of a local investment company. Over the years, I have learned to look at projects in a businesslike way. In the question of the coal industry, we have a market, Nova Scotia Power, to buy coal and in Cape Breton, we have two main generators, Lingan and Point Aconi. It is obvious that if we don't produce the
coal to feed those generators, the coal will be imported. So, I see it as an option, do we import coal to feed the generators or do we produce the coal ourselves? All my information indicates that if we use modern technology, new kinds of work methods, we can have a very solid, profitable coal industry in Cape Breton. It won't be the way it was before, but from a business point of view, it's that way.
Now concerning the surplus coal miners - and there will be - we know that a solid coal industry in Cape Breton would only require about 600 miners. So, this is a different kind of problem. I believe that with imagination and collaboration of all governments, it is possible to look after all of the coal miners that we have today. There are some of these people in the age group 47, 48 and 49; I think everybody over 50 should get a decent pension. If the federal government cannot give a living pension, the province should look at some sort of a special fund to top up. I think if we could resolve that problem of looking after the older miners, the question of the coal industry would be much simpler. It would be a lot easier to handle. I believe the younger miners, in development of a new coal mine, you use more people than when it is up and running, so I think with imagination and goodwill, it is possible to set them all up.
Also, I mentioned in my remarks, some of the things I favour: training, I call it work education rotation, for instance, where you have a few hundred coal miners on a rotation, they work six months and study six months and take retraining and upgrading. So, you don't simply put them out on the street, you keep them in the system.
Third, that is the coal industry. I am in favour of a new company to run Prince Mine and Donkin. I think there is a basic common-sense logic there. Phalen I keep my nose out of. It is too complicated. I don't understand the technical stuff there, but most people seem to think it does not have a long life.
Now, the other point, you cannot take the coal industry in abstraction from a general economy. I agree with Rankin that we need a long-term plan. I consider taxes to be the key instrument, and I include Guysborough. Gordon pointed out the problems are similar, that taxes are a key instrument in development and there are all kinds of precedents in other countries, other jurisdictions. The senior officials in the Nova Scotia Government have refused this sort of thing. They are happy, they say the province is doing fine, the statistics. I am saying no, we are not if you look at unemployment. My priority is people, those who are unemployed.
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Myself and others are proposing a flat business rate of 10 per cent for 15 years, and that has been done in other places. These things should be considered. When I say that, I say these packages should be geared to areas where unemployment is 50 per cent higher than the national average. It is not just political wrangling, there is some sort of objective measure. I
would like tax credits related to the number of employees. The Nova Scotia government gives tax credits for capital equipment machinery. That is great for the economy, but it means you lay off workers. If my priority is unemployment, unemployed people, the tax credit should be related to my workforce, how many people I hire.
I throw in the idea about deteriorated mining towns, main streets are awful - for example, New Waterford, Glace Bay and Sydney Mines. I would like to see an interest-free mortgage fund set up for the mining towns. Some people talked to me from New Waterford about trying to get some nice building and attract business. You can't afford the mortgage rates. I said it would be sensible for government to put up an interest-free mortgage fund so that you would make some nice buildings as infrastructure viable.
Education, every study that has ever been made says education is key in development. I would say it wouldn't be awfully expensive to have an intensive education program for areas of high unemployment, not just Cape Breton, but any area that has higher than a 50 per cent unemployment level.
Venture capital, I am in venture capital, at BCA Holdings. We have been quite successful and proud of our record, very little money. We have never had a grant. I might say New Dawn has never had a grant, and we have survived as an investment company, largely through volunteer business people helping out.
I would say a $30 million investment fund is necessary for Cape Breton. I am very angry in a sense that we can't raise money in the community because the government-sponsored funds are given kinds of tax credits and we can't compete. The labour-based fund that is based in Ontario, every mailbox in Cape Breton saying we will give you all these tax credits, we have nothing to offer BCA. We just went around helping out. We have done it, but we have been knocked out of the ring by this and it is not fair. All of the venture capital companies are in Halifax. Enough.
I am going very fast, because you can read that at your leisure. Last night, I started to think about this committee. I make a distinction between politicians and officials. The old- fashioned way of doing government was that legislators would get together and make policy, and you hired these civil servants and they carry out your policy. That is the old way of doing it. I don't think it is done that way today, because I think usually civil servants tell the politicians what is possible.
I said, I think I will come up with some policy. I made three, and perhaps it would be distributed. In the face of a problem like disparity within a province, you would expect policy. One, when should the government intervene in an economy? In economics, there are winners and losers. A policy of government, the government legislators should make a policy saying, we will intervene only in order to help the losers, the disadvantaged, the unemployed. That is a policy.
Sometimes it looks to me like the present policy is, we only intervene to help the winners. Today that is happening. It is easier to get government subsidy if you are a profitable company or if you are in an area of high and buoyant growth, it is easier to get the government subsidies. I say that means a policy of government is to subsidize winners, companies that are already making profit, and almost every company that came to Nova Scotia were making profit and we give them more money. There is something wrong there in policy. I think legislators should think about that. In a free enterprise system, profitable businesses should not be subsidized, rather the disadvantaged and not just individuals, but communities. That is one policy.
Two, universities. Should universities be assisted to play an economic role? That is a policy question. I am saying, in my view, yes. Universities are paid by taxpayers, public, and they should be required to play a role in development. UCCB, we thought we would be able to play a role in development. The other universities did not agree, in Nova Scotia, so the way money is funnelled in Nova Scotia, it is from the government to the Higher Education Council and the delegates from the universities pretty much decide who is going to get the money. We lost out in that game.
I want to give an example, the Open University in Britain, which has been very successful, was set up by government to make education accessible to more people, which is really a policy, a political move by the British Government. They made a rule. They said if we put the funding through the British Higher Education Council, the other universities will stamp them down, they will never let them do things differently, so in Britain, the Cabinet decided the funding will come directly from the Cabinet, not from the existing British University Council, because the other universities don't agree with this policy.
We are condemned. We have the lowest per capita funding in Atlantic Canada and, I think, the lowest in Canada. Almost every university in Atlantic Canada got an enterprise centre to help with business, we only got one last year. So I say it is an indicator of policy.
Three, should government impose policy on government-funded venture capital companies? I say, yes. If it is government money, government should attach policy to it. There are three venture capital companies in Halifax funded by government: Working Ventures, Atlantic Equity Fund, and Innovacorp Venture Capital Fund. The three of them made a policy that they only invest in companies that can promise 25 per cent return per annum. Those are the high rollers in investment, in business, and the philosophy there is, go with the winners, the big-timers.
It is taxpayers' money, and I am saying that that doesn't work in slow economies like Yarmouth, Guysborough, most places like that. We would prefer an investment policy that is based on long-term viability, and modest returns on capital; something like 10 per cent return on capital, and long-term. This is a policy question that I would like legislators to take a look at, that kind of thing.
I attached a couple of things. Ireland, Corsica, and I was in France last year at an OECD conference. The South of France has high unemployment, so the French Government - and this isn't just a Gaullist Government or a socialist government - made a policy. We have to do something, they said, locate a high-tech centre in Poitiers, in the area where they lost out on agriculture. They did that, a $1 billion centre, and it has had a tremendous impact on technological industry in the area. That was a government decision, and they relocated distance education down there at that centre. Jacquelyn Scott thought that governments would support it when she tried to get the tech centre, this new science/technological centre at UCCB, and it would have fitted the kind of policy in other jurisdictions in a similar situation, but she did not get the support of the Nova Scotia Government or the other universities.
Instead of a fight between individuals and a fight between universities, I think it should be policy, where there is some kind of an operating policy made by legislators. Corsica is another example. The officials in this government have said, oh, you can't give special tax breaks to a place like Cape Breton, Yarmouth or Guysborough because it is against free trade or something. The Europe Common Market is free trade and yet, because Corsica in France has unemployment 50 per cent higher than mainland France, they said, okay, we are going to give you special breaks on tax. All the taxes were cut off in businesses on Corsica doing business internally; they excluded big ones like General Motors. Anyway, I will stop there. I tend to go on and on.
MR. CHAIRMAN: We have about 45 minutes left, so we are going to divide it up into three sections of 15 minutes and that will leave us with about 5 minutes at the very end to deal with our next agenda item for the coming weeks.
We will begin with the Opposition, the New Democratic Party caucus. Mr. Corbett.
MR. FRANK CORBETT: Thank you, Mr. Chairman, and thank you, gentlemen, for coming here. First of all, Mr. [Gordon] MacDonald, you may not be from Cape Breton, but I think your mother's blood is there for sure. You talked in terms of probably not being able to relate to Devco, but I think in your presentation it is accurate because of the sense of the movement in the Guysborough economy from a resource-based economy at one time and the fluctuations around there.
The question I want to ask, what would you see of Guysborough's position had it not been for the gas project? Where would you be taking your economic development if that wasn't there today?
MR. GORDON MACDONALD: I think to a large extent, we would probably be continuing to spin for another generation or two. It has provided something that has filled a void and a vacuum there that has been present for at least 100 years. I guess even as a regional development authority, when you look at the 13 regional development authorities in
Nova Scotia, they are all very different animals. Each community decides what it is that they want to focus on; for some it is very much on community development, and some are much more focused on economic development. It is just a function of opportunity, I guess, where you identify the opportunities. For us, if the petroleum industry hadn't come along, we probably would have continued to rely on the small community development, project by project, and trying to develop the economy that way.
MR. CORBETT: I will kind of move along because I know time is short and I don't want to hog all the time. Mr. MacSween, you and Dr. MacLeod talked about the taxation level and how that impacts on the movement of the local economy and so on. I think Dr. MacLeod may have talked about a flat 10 per cent tax rate on new business and so on. How serious is the taxation level on redeveloping the economy of what we will refer to as industrial Cape Breton or Cape Breton County? If something is not done to refocus taxation, can we prosper?
MR. MACSWEEN: Well, I would say, Mr. Corbett, that clearly the reason Greg and I talked about tax is the whole business of the means to raise capital. Cape Breton needs a platform and capital is a critical part of that piece, although I regret we don't have a very clear set of numbers on the level of capitalization that is required in terms of business investment and infrastructure investment. Our best guess at New Dawn is we are talking something in the range of $1 billion.
The irony for me is, just looking at the RRSPs, on the one hand we have all of this money flowing out of Cape Breton and we don't have any structures that enable us to try to capture some of that. For me, as I mentioned in the presentation, it was really exciting. The legislation that was implemented last fall, the provincial legislation, I think that was a very, very important first step. But I would hope that that is just a first step.
So for me, if we are going to have a future, the whole business of coming to terms with a plan that would enable the community to begin to capture both capital that is available on the Island and capital that could flow from off-Island towards Cape Breton, I think this is just basic, this is elementary.
MR. CORBETT: We are here talking in terms of Devco but in the context of the closure of Devco, if we impacted that with the closure of Sysco, what would that mean to the economy of Cape Breton County?
MR. MACSWEEN: Again, in Cape Breton one of the things we don't have is the capacity to do this kind of analysis, certainly at New Dawn we don't have it. But certainly, Devco represents 20 per cent to 30 per cent of the economy as it stands now. I agree with Greg, I think there is a coal mining industry there but it is going to be a much smaller kind of industry. You couple that with Sysco and those are big, big numbers.
MR. CORBETT: To Father MacLeod. Greg, we have heard some talk from some groups, and you are talking about getting working capital and so on and talks in terms of maybe a workers' co-op of affected Devco workers. Could you set up a model, would you see that? What is the likelihood of that moving forward and being a success?
DR. MACLEOD: Well, I just returned from Spain and I hope some of you bought my book on Mondragon, From Mondragon to America, where they have worker-owned companies in northern Spain; 40,000 workers own these factories and retail stores and it has been there for 30 years. They have never had a bankruptcy. Worker ownership is a very reasonable option today. We know about Algoma Steel and many places where this sort of thing goes on.
In the coal industry - I hope I don't sound too much right-wing - every time you think of setting up a business you have to look at the context. I don't think it is realistic in Cape Breton for the coal miners themselves to take over the coal industry. There are so many problems and lack of capital, that would be, I would say, a dangerous dream for anybody to say, the coal miners have to sort it out. What I promote and I have said publicly, any new form and I accept that the coal mines are going to have to be privatized but I want to make sure it is not sold off bit by bit. I believe it should be sold as a total unit and I accept that it should be a private company but I would insist that in the private company that the workers have a percentage of the shares.
So my position is very clear on this, that I think that the coal miners who work in the new company should have a share in the company, should be shareholders because the only way it is going to work is if it is not two sides of the table, it is a collaborative and cooperative effort. Because of the size of the coal industry, you really will need outside investors, so it has to be more conceived in a partnership. We have models of this done in other places.
In the France thing, it was very interesting to me, there were 50,000 farmers in this region, with the new economy, they took away the subsidies and government support and you only had 10,000 farmers or 5,000 farmers. It is not coal but it is similar. Policy-wise, what the government did, they said, we would rather have a healthy agriculture with only 5,000 or 10,000 farmers than a bad agriculture industry. What they did, they built, in the south, in the farming industry, a $1 billion high-tech demonstration centre, which became a park for high-tech industries. The Government of France moved related, high-tech, government-controlled activities, like distance education or things like that to there so you had the two prong. That is what I said, I accept in Cape Breton that we are only going to need about 600 coal miners, I accept that, that is rational to have a healthy coal industry. But, I say government has a responsibility to do something countervailing to make up for that loss of jobs. Does that answer your question?
MS. MAUREEN MACDONALD: Well, thank you all, your presentations are very interesting. I have very short questions, really. Mr. [Gordon] MacDonald, it is very good to
hear about what is happening in Guysborough County, I have strong roots in that county. I am quite interested though in whether or not there are any particular special measures that are being taken to include Black communities within Guysborough County for a share in the prosperity that hopefully will occur there?
MR. GORDON MACDONALD: Very much so, both within the economic development process and within the evolving petroleum industry as well. With our own organization they do have a development officer that represents the Black communities that works very closely with our own development agency and also works closely with the Sable components. That is something with SOEP as well, I think they have done an excellent job with the very inclusive approach that they have taken and the special efforts they have made, whether it is having community information sessions or whatever in the county, when they do so they make sure they have them within the Black communities.
The problem that we have seen and we have had a lot of discussions with the Black community, the problem is generally in Guysborough County and the outflow of your youngest and brightest individuals from the county are that much more pronounced in the Black communities as well. Through our skills inventory as well, that is really recognized there for the most part the individuals that have achieved a high degree of education, they are not in the county anymore, they have moved away and it is a very aging population within the Black communities as well.
MS. MAUREEN MACDONALD: I guess the other question I have would be for both Mr. MacSween and Father Greg. You have both been talking this talk for a long time, beating this drum (Interruption) I guess what I am curious about is, what, in your view, has prevented governments from taking up many of your proposals and approaches and how deep do you think the crisis has to be before anybody really listens?
DR. MACLEOD: I think government is controlled and run, Nova Scotia, senior civil servants, senior university professors, administrators, consulting companies and accounting companies, that decide what will happen. I think politicians come and go. I am amused because in the 1970's I used to argue on the growth sense of the committees here in Halifax and I come back now and I see the same people, they are older but they are saying the same thing. Most of the established planners concentrate on macro-economics and what they look at are the statistics of the total province, their productivity.
I am saying that our approach is community, we look at the people. We have got unemployed people, we have got a village dying. As far as these planners are concerned it doesn't make any difference where you live, let the people of Glace Bay move to Halifax - on numbers in macro-economics it doesn't make any difference - or move wherever they are going to move and I think that is the key. If you make your key thing human welfare and people having jobs and community survival, I think that is the main thing.
MR. MACSWEEN: I think what is interesting, I think Nova Scotia, as a province, historically has had the same problem with the Government of Canada, in the sense that it has a continuing hard time with the Government of Canada in terms of trying to put forward and get its interest heard and appropriate actions taken. That is why in 1935, Harold Innis suggested to Angus L., good Cape Bretoner that he was, that he should create a professional Civil Service in order to join, counteract that direction or the overwhelming impact of the government on the province in terms of Ottawa kept acting in its interest as opposed to the province's interest.
Last March, there was a very interesting article in the Globe and Mail, they were talking about the area of Palestine and the fact that there had been billions of dollars put into Palestine to develop it, and nothing had happened that was of value. Nothing seemed to take root. They were asking why, and the comment was made that in Palestine the most fundamental element of development had been overlooked, if you want to develop a poor community, the first step is you have to build strong organizations within that community.
The grand city of Toronto is a wonderful, vital city; it is a city of organizations, mostly private-sector organizations. The modern economy is an economy of organizations. If you look at Cape Breton, one of the characteristics of Cape Breton is that it has very few organizations that are controlled in the community. Most of the organizations that are present are controlled off-Island. In terms of what Cape Breton's future has to be in part about, is that whole business of building organizations. Historically, I don't think for 40 years that has been a practice, that governments have been inclined to move in. They have tended to try to move in and do it themselves; trying to do the retail business as opposed to trying to function like what I call as a wholesaler.
MR. CHAIRMAN: We will move now to the Progressive Conservative caucus. Mr. Balser.
MR. GORDON BALSER: Mr. Chairman, certainly in Gordon's [MacDonald] presentation, he touched on attitude and the need for a positive philosophy, and in light of the gas and the potential it offers Guysborough, there is reason to be positive.
I have heard people, particularly around the IT sector, saying there is a wealth of opportunity and in other areas, it is still somewhat clouded in, maybe we can hold onto the old. I know when I visited Isle Madame, some of the people there said one of the most critical steps was actually the demolition of the fish plant that had existed and they said that predicated a real change in attitude, to sort of look ahead.
I am curious about that. Is Cape Breton looking ahead? Are they all looking the same way, or is it still kind of cloaked in what might be and what could be? It seems to me that attitude is critical, and that is what has been said in terms of presentations. You talked about
the Irish model and where economies have turned around, it has been prefaced around a real change in attitude towards the future.
DR. MACLEOD: I think yes, we have changed attitude, but I just want to make a distinction. Isle Madame, they tore down that kind of old-fashioned fish plant, but they didn't give up on the fishing industry. They have mussels and aquaculture, so they brought in a modernized fish industry, that is important. Like in France, they brought in modernized agriculture. I am saying, in Cape Breton, it is bad to say let's get rid of coal, I am saying let's bring in a modernized coal industry that is competitive and businesslike.
On the high-tech side we have tremendous production and we have done very well, but as in France, in Cape Breton we have not been able to get the supports, I would say, that government should help make. I give the example that in France they said we are going to put in this technological centre which is a $1 billion centre, we are not going to get that in Cape Breton but something on that idea. I said, Jackie Scott was thinking that way, this tech centre would help our fledgling IT industry, but it was opposed by, I would say, the heavyweights in Nova Scotia.
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The other thing is investment capital. We just did a study on venture capital and we found that the high-tech, all this computer stuff, our types of investors aren't used to that. They are used to factories and agriculture and old-fashioned things, but the people with the money don't understand that, so they won't invest. In order to help encourage that high-tech, that was part of my thing, we need a special kind of investment fund where that is taken into consideration.
I would say, there is a tremendous new wave and the university is a key in this, it has to be, it always is. It is not just going to happen by itself, it needs the support. We have a number of fine little companies going, but they require investment and they are not going to get it with the investors we have available.
MR. BALSER: Going back to the Irish, one of the things that was critical to their success was the fact that labour, government and business sat down and developed a multi-year strategy where they had a common goal. Is the climate right in Cape Breton for that to happen now?
DR. MACLEOD: Tompkins Institute had just set up what we call the Labour-Business Foundation. I am delighted. The president of this foundation is also the president of the Labour Council, the vice-president is the president of the board of trade. There are both business people and labour union in this foundation, and their intent is to set up new businesses. Labour union people say, we are not just going to wait for some business to set up and then go in and try to unionize, we are starting. So this is new. We have had a terrible
labour union record in Cape Breton, tremendous problems, and it is understandable if you look at our history.
I say there is a change, and definitely in labour unions, and people are ready. I found the federal government very supportive in a lot of these things that I am involved in anyway. I am very critical, we have not had provincial support in a lot of these things. I said that I hope it is changing now, that it has recognized special problems. As I said, the unions have shown they are ready to do something and they are admitting now they have to change how they do things. We do require government support.
MR. BALSER: One last question. The Irish resurgence was tied to IT, the Carolina's IT. You talked about a privatized coal industry. Where should the future economy of Cape Breton be focused? Is it sort of to develop a number of areas, or should we be looking at a particular aspect? There is a great deal of hope for Nova Scotia in natural gas, but is that where we focus our energies?
DR. MACLEOD: Most predictions about the future haven't been too correct. It is very hard. I would say we have to run with what we have. We could have a high-tech coal industry - don't think that the coal industry has to be old technology - I am promoting the high-tech coal industry. Miners have to operate computers now, the new kind of coal industry. The focus in Cape Breton, I think provincially, the province should agree on some things. The present government said, and I was delighted by this, that Cape Breton would be the information technology focus for Nova Scotia, and the Agricultural College and Halifax would be biotechnology and the food industry. That made sense.
The politicians said that to us, but then when we start to try to do it, the Civil Service doesn't agree with the government on this, so when you try to do something, you bang into a cement wall. I found the federal government in general seemed to agree on some of these things, but in the actual operation it stopped. That is what I am saying, I mentioned especially the university. You can't do information technology without the support of university, it just won't work. So in the present set-up we cannot develop the university. If it is part of provincial policy, it has to be fitted in another kind of structure.
I am saying, the leaders in the community have a new attitude and we agree. Even the harbour, I have said, why couldn't you make Halifax Harbour the freight harbour, the commercial harbour for the Maersk line and all of that, why not make Sydney Harbour the cruise ship port, make it a home base for cruise ships, then we are not fighting each other. Cape Bretoners say, okay you have those container ships from Maersk line, we are famous for beauty and the lakes, let us have the cruise ships. That way you would be dividing it up but I found we haven't been able to achieve that. I am hoping you legislators will make a difference.
MR. CHAIRMAN: Mr. Archibald.
MR. GEORGE ARCHIBALD: Thank you, gentlemen, for coming today, I really enjoyed your presentations. Today has been a very good day because I was listening to CBC this morning and hearing about Guysborough and the economic development even before I got here. Sean was on talking about some of the opportunities that are going to be happening in Guysborough and it is very encouraging. One of the encouraging things is that your Development Commission is out in front all the time thinking of new ways to do things, new opportunities, new people to partner with and I think that is where you have to go. When you continually are bombarded with the virtues and the opportunities in Guysborough County, it starts to sink in. You are certainly to be commended. The oil and gas industry has changed Guysborough already and I think in the next five years it is going to change it even more. There will be a 700 acre industrial park, co-generation, dear knows what else you have cooking.
When I look at what is happening in the Guysborough area I am thinking also that the Laurentian Basin holds the same potential, in fact, more potential for Cape Breton than the Nova Scotia offshore is holding at the present time. I am wondering, is there some economic coordinating committee working in industrial Cape Breton now to get ready for the offshore supply ships, the offshore exploration, for bringing gas and oil ashore in Cape Breton because it is going to happen right in industrial Cape Breton. I am just wondering, how coordinated are the community development associations?
MR. MACSWEEN: First of all, Mr. Archibald, I am not clear about what the timing is for the Laurentian Basin. I have heard some people who suggest . . .
MR. ARCHIBALD: Well, it is kind of up in the air because Nova Scotia and Newfoundland are sort of having a discussion and it will be decided sometime this year I think but the sooner the better. I think they could really be putting the leases out now to get the supply boats running back and forth anyway. The sooner that happens, the sooner you are going to have the work.
MR. MACSWEEN: But I am a little bit anxious about the discussion about the Laurentian Basin in the sense that I hope and pray that there is oil and gas out there. I stand to be corrected but I don't know if anybody is absolutely sure what the time line is there or what exactly would be the resources out there. It will be great if it is there as some of the predictions forecast. I am a little bit uncomfortable because there does seem to be the comment sometimes, Cape Breton, your turn will come and by God if the gas is there, great, but if it is not there, God help us, if that is what we are going to hang our hat on.
I like your comment, that is certainly the general place where I think you are going in terms of that it is something that we should prepare for. Though I am not aware of anything exactly that Cape Breton is doing in that respect, but I think it is something that should be considered.
DR. MACLEOD: I think Cape Breton has some sins and part of it is the in-fighting between groups. On the coal issue, I think the quicker we resolve - and I said the coal question - the easier it will be to go on to those other things because a lot of our leadership was afraid to jump in strongly on the gas and oil for fear of alienating coal miners. So, I say the quicker we resolve the coal issue, the easier it will be to have a coherent approach to gas and oil.
MR. JAMES MUIR: To Rankin or Greg, you mentioned Sysco this morning. How do you see that as playing out in industrial Cape Breton?
DR. MACLEOD: I am fairly close to Sysco. It's the same sort of thing. You have an industry that is an old industry with all kinds of habits and customs built in and we know that it has to be modernized. It was modernized in the equipment but it was not modernized in the structures and the management. We did have a community committee that studied the thing and all our inquiries in the industrial world said that it is a very sound company, Sysco, a physical equipment ability to produce. It's excellent and the whole problem is it is an orphan steel plant and the whole viability of Sysco hangs around the right kind of partnership. That is what it was when we looked at it about three or four years ago and it still is that.
There is still the open question, but it is very clear - I think that should be underlined - it is a good company. The physical plant can produce very high quality, competitive products, but it can't do it alone. It has to be plugged in with partnerships and that is what it stands on. I don't know whether it can be resolved or not.
MR. CHAIRMAN: We will move to the Liberal caucus at this point.
MR. PAUL MACEWAN: I can start off, if you wish, Mr. Chairman. I admire New Dawn Enterprises a great deal because they have done some fantastic work. Now, I may have a particular reason for saying that because they took over an abandoned military base in my area, the former radar base in Sydney, and have transformed it into a fascinating mix of rental housing, long-term care, and care for those who are more than long term, shall we say, Carefield Manor. So, I fully support their work. This is the second time this week that I have seen Rankin MacSween. I saw him this time yesterday, only at his office in Sydney. I was lying in wait for him when he got to work at 9:00 a.m. I must say, sir, from his height, Rankin is a man that I can look up to.
Having said those opening preliminaries, I would like to compliment all three on their presentations. I was just reflecting when I was thinking about Rankin's proposal to relocate the capital of Nova Scotia in Yarmouth and the difference that that would make. But that is actually true, there are a number of countries that have relocated their capital, Brazil being one. One that I was thinking of more particularly this morning was Russia. In the year 1918, the government was slipped out one morning out of St. Petersburg and transformed to Moscow and has stayed there ever since. The effect that that had was that Moscow, which
had formerly been a backwater, became the number one city in the country and St. Petersburg, which had formerly been the number one city, became a backwater and it has stayed that way ever since. So, perhaps there might be some merit to your proposal although I would suggest that the capital might perhaps be better relocated in Sydney. It might be more propitious.
MR. ARCHIBALD: Then we would be closer to Baddeck.
MR. MACEWAN: Then we would be closer to Baddeck. Mr. Archibald supports me. I just want to congratulate you gentlemen on your proposals and submissions. I don't have any questions in particular, Mr. Chairman, but I wanted to make a few complimentary remarks because I think we have heard some very high quality presentations here this morning.
MR. CHAIRMAN: Mr. MacAskill.
HON. KENNETH MACASKILL: Mr. Chairman, that is a hard act to follow. Relative to history, I won't try that, but I want to thank the three members for their presentations today. I think it is an interesting presentation. Father Greg, I am quite familiar with some of your activities that you play in my county. It is good to hear that over your tenure, you have no losers. That is good news for my county.
If I may, there was a question that I am not quite clear on, where you made reference to government supporting winners and not supporting losers. I am not quite sure what you mean by that. Do you mean that we shouldn't be supporting companies like Michelin, Stora and there may be others?
DR. MACLEOD: Yes.
MR. MACASKILL: For instance, we supported Dynatek, which was a loser. I am not quite sure what you mean.
DR. MACLEOD: No, not quite that way. It is not just individual, it is the area. Atlantic equity is ACOA and provincial money, about a $25 million fund. Okay, that's taxpayers' money. They say they are not going to invest in any company unless they make 25 per cent profit per year or a 25 per cent return, and I am saying that the only places where you find companies like that would be in a dynamic area like Halifax. High growth; fast growth.
What they are saying is that we are only going in the winning areas. Those companies, I don't think they have invested in Cape Breton. I am saying I can understand, because most companies that we see in, say Victoria County; the rate of profit, most of the kind of business people I deal with, they look at a company that would have long-term, solid strength, that is going last. They say if you get 9 per cent return or a 10 per cent return, we are okay, we are not in that league of all these high-roller people. I would say that is a policy of government.
Also they have said in the government that Halifax is the strong-growth centre. So if the federal government is going to put money into a science and technology centre, they say if you put it in Halifax and combine with the tech and the this and the that, it will be strong and bring more results while, if you put that in a place like Cape Breton, it might have some results but not as big as you would have in Halifax. So the technical, I would say, officials in government and the consultants and accountants, all they do is say it is going to be a lot more successful in Halifax; the kind of gains you get would be 20 per cent or 25 per cent. In Cape Breton it might do some good, but it wouldn't be as rich and as strong as it would be here.
I am saying, policy-wise, you should say in a province we should try to get a little more equality. So you would say, yes, we are going to put that tech centre up in Cape Breton. We know it won't be the highest rate of return, but it is going to have a stimulus on the rest of the economy. So that is kind of what I meant.
I am not saying a losing company, to lose money on companies, but I would say if you are going to interfere in the economy, be clear why you are interfering. Why does government intervene? I am saying that I find that is getting very fuzzy. It is like a football game today, football teams, New Brunswick and Nova Scotia. I am saying that I don't like that and I don't think it is healthy in government. I would much prefer where government says we have a problem of unemployment and threatened communities and our policy must be to correct that. In general, I would say, no. If a company is profitable, I wouldn't subsidize it.
MR. MACASKILL: If they were going to hire an additional 100 people or 200 people? That's why government supports these things.
DR. MACLEOD: If they were going to hire them in an area of high unemployment, yes, I would, but not if they are going to put them in an area and tell people to move from Yarmouth, Lockeport and Glace Bay up to that company. The provincial civil servants here say it doesn't matter where you are working in Nova Scotia, put the company anywhere and it is the same thing. It doesn't matter if someone in Englishtown or Glace Bay has to move to Halifax, it is the same thing, it is one province. That is what they said and I disagree.
MR. CHAIRMAN: Mr. Fraser.
MR. HYLAND FRASER: Gordon, thanks for the presentation. I sort of saw it before but I know you keep updating it. I have a couple of questions. I know Antigonish is certainly benefiting from what is going on in Golboro, and perhaps more so than Guysborough County in a way. In order to have that area of your county grow, I see housing as a big need. I see what is going on in Antigonish, subdivisions have been developed basically to support the housing needs for the project down in Guysborough. I am wondering, how are you going to address that? I am not saying I don't want to see any more in Antigonish, I am not saying that but you did your presentation. How are you going to address that? I don't see that going on in Guysborough anywhere.
MR. GORDON MACDONALD: It's been a recognized impediment, even in terms of fixed accommodations. The biggest thing is to differentiate between the construction phase because it is short term in nature, the housing is not going to develop to serve the construction phase and the operation or development phase. We are seeing it now with the operation's associates, the 75 to date that have been hired, 35 of those live in the county. We are getting a much better share of the permanent positions.
It is something that we had discussions on certainly with the municipal units, both in St. Mary's and in Guysborough. I think there may be some things that the municipalities can do, as well, to put in place some developments and offer some services that would attract that sort of development as well. We think it will come as the more permanent and long-term development comes, certainly not during the construction phase.
MR. FRASER: I think probably you addressed that a little bit with the psychology of people that this is not just a construction phase that is going to be good, this is good for the long term. I think people build housing for the long term and not for a construction season or two or three. I think you are addressing that part of it there because people will need to be positive.
The second item I would like to ask you a little bit about, I know there is probably some competing interests on where the petrochemical industry may be located and I presume that you are working on the Mulgrave site?
MR. GORDON MACDONALD: Melford.
MR. FRASER: Melford rather, yes. Can I ask how that is going?
MR. GORDON MACDONALD: I think where it is at right now is that the investor that has expressed the interest has to have his negotiating team sit down and talk to the proponents. Until he does that there is not much to talk about because he hasn't taken the step to actually sit down with the negotiators to negotiate the feedstock.
To expand a little bit on what Mr. Archibald had mentioned earlier, in terms of what is going to happen in the Laurentian Basin area, those new permits that were announced while in Houston, it is a five year development period where they have to move in and make their development there. Something we have done that I think would be good for everybody to do, is to push for a settlement of this boundary dispute between Nova Scotia and Newfoundland; let's have it resolved. We are focusing too much of our energies in areas that are not bringing a resolution to that and the time-frames that we have been told are still well down the road before the process even begins to settle that. We are not close.
MR. CHAIRMAN: I think our time has just about elapsed. We have a few other items we have to deal with and only a few minutes to do it, so I wanted to extend my thanks on behalf of the committee to Mr. [Gordon] MacDonald, Mr. MacSween and Dr. MacLeod for being with us this morning. Your presentations were certainly very thoughtful and we appreciate all of what you have had to say this morning. We are looking forward, in the next few meetings, to being able to bring together some recommendations, which is what we set out to do originally. Thank you very much.
Committee members, if we could have a look at the agenda.
MR. MACASKILL: If I may, I have P & P on Tuesday mornings. It is cancelled today, but it is a difficult day for me.
MR. CHAIRMAN: I am not sure what else to say. Can we just deal with one thing first. People are you off, do you have to go right away? Okay. I wanted to deal with the proposal that was put forward with respect to the Sysco tour. I think most people have been polled and my understanding is that most people have agreed that the committee should go and meet the request.
MR. ARCHIBALD: Who agreed to that? I never heard it before. I might have missed the meeting. Did I miss the meeting? When was this discussed?
MR. CHAIRMAN: If my information is wrong . . .
MRS. DARLENE HENRY (Legislative Committee Clerk): Actually that was brought forward in the House by Mr. [Manning] MacDonald, back on May 25th. He said, ". . . I am now extending an invitation to the Economic Development Committee . . . Party critics with both Parties . . .", to a tour of Sysco. So, Mr. Dexter had asked me to poll everybody to find out if they are interested in going, and I was talking to everybody's secretaries. I had gotten some comments back. For the PC caucus, Ms. Surette had said, yes, she didn't see a problem with you going, that you might be interested. You could either say yes or no . . .
MR. CHAIRMAN: Let's just resolve it now. (Interruptions) The question for the committee is whether or not we want to take the opportunity to go and to have a tour of the Sysco facility.
MR. ARCHIBALD: Has anybody not been through Sysco at least once?
MR. CHAIRMAN: I have never been through it.
MR. ARCHIBALD: Oh, you have never been. You should see it.
MS. MAUREEN MACDONALD: I would like very much to go.
MR. MACEWAN: As long as she doesn't go swimming in the tar ponds like Gerry O'Malley did, she will be all right. (Interruptions)
MR. CHAIRMAN: The question is whether or not the committee is going to go in response to the offer that was made. I understand the offer was extended to the Economic Development Committee to tour the facility, and I think a further part of it was to meet with Hoogovens and to have an explanation of what their business plan was. I think the offer was fairly broad. I have heard some debate around the question of timing and whether this should be something that would be scheduled to follow the House after the House had risen. (Interruptions)
MR. ARCHIBALD: Certainly, we are not going to do it while the House is sitting.
MR. CHAIRMAN: Of course, well, you could do it on a weekend.
MR. ARCHIBALD: On a weekend?
MR. CHAIRMAN: Sure, do you have better things to do on a weekend?
MR. ARCHIBALD: That is when I go home to my constituency. I hate to suggest that I would rather go home to my constituency than tour the Sysco steel mill, but my weekends are not . . .
MR. CHAIRMAN: Can I put the question this way then, would it be the wish of the committee that we arrange to meet that request once the House rises? I see everyone nodding.
MR. ARCHIBALD: And I see you have two meetings scheduled here, one for June 15th and one for June 29th, at either one of those meetings we might have an idea of what is going to happen with the House.
MR. CHAIRMAN: Certainly, if circumstances change, then we can deal with them. I think for planning purposes, we just have to know whether or not it is going to happen so that we can communicate with . . .
MR. ARCHIBALD: Are you thinking July or August?
MR. CHAIRMAN: I would think, yes.
MR. MACEWAN: I would think one of the Monday to Friday days of the week would be better for Sysco, because it would be more convenient . . .
MR. CHAIRMAN: It almost seems like a Monday or a Friday would be the better date.
MR. MACEWAN: Either is fine with me.
MR. ARCHIBALD: Monday to Friday.
MR. CHAIRMAN: Either a Monday or a Friday. Mr. MacEwan, I think, was commenting on your suggestion that it not be on the weekend.
MR. ARCHIBALD: Well, what is wrong with Tuesday, Wednesday and Thursday?
MR. CHAIRMAN: Let's just leave it at that for now and I will try to schedule it so that it suits everybody's schedule as best as possible. Mr. MacAskill.
[10:00 a.m.]
MR. MACASKILL: I would prefer Monday or Friday. That way I wouldn't have to travel back home.
MR. CHAIRMAN: Well, that was part of my thinking as well. Okay, we can leave the details of that to another meeting. On June 15th, I hear what you are saying, Mr. MacAskill, but we have tried every single date to try and schedule this time and we are having no luck at all in terms of nailing down all members.
MR. MACASKILL: Maybe we will try to find a replacement when we can.
MR. CHAIRMAN: June 15th presently is scheduled for Mr. Drake, Mr. MacEachern and Mr. MacAdam. We have not heard back from Mr. Tomiczek. There has also been a request from the NSTU who I understand have done a study with respect to the impact of Devco. It would be possible to move them onto June 15th as well, is that advisable?
MR. MACEWAN: Well, I don't know if that is advisable. You have four people there, at least three and they will want a good hearing. If they are crammed in with another group on the same date with just two hours . . .
MR. CHAIRMAN: Okay, should we leave the NSTU until June 29th?
MR. MACEWAN: That might be better, in my view.
MR. CHAIRMAN: I think they want to release the study.
MR. MACEWAN: I think the UMW should be given the full two hours, Mr. Chairman.
MR. CHAIRMAN: Well, the UMW and associated unions.
MR. MACEWAN: Yes.
MR. CHAIRMAN: Okay, I think that is everything. Is there anything else for the committee to consider this morning? Seeing nothing else, I adjourn the meeting. Thank you.
[The committee adjourned at 10:02 a.m.]
