HALIFAX, MONDAY, MARCH 26, 2018
SUBCOMMITTEE OF THE WHOLE ON SUPPLY
Mr. Chuck Porter
MR. CHAIRMAN: Order, please. I call the Subcommittee of the Whole on Supply to order.
The honourable Government House Leader.
HON. GEOFF MACLELLAN: Mr. Chairman, would you please call the Estimates for the Department of Business.
Resolution E2 - Resolved, that a sum not exceeding $156,111,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Business, pursuant to the Estimate.
MR. CHAIRMAN: Honourable Minister, we invite you, as Minister of Business,
to begin your opening comments.
HON. GEOFF MACLELLAN: Thank you, Mr. Chairman, and I thank the members who are here on behalf of their respective caucuses to have a discussion about the Department of Business and all the positive things that the department officials have done over the last year, and I look forward to the discussions and the questions that will result. I would also like to thank the staff members who are here, and who are behind us representing the Department of Business and the Crown Corporations as well.
I am pleased to be here today to speak to the 2018-19 Estimates for the Department of Business and answer your questions. Before I begin, I want to acknowledge the hard work of the staff at the department and our five Crown Corporations. Many of our senior leaders are here today and we appreciate their presence and support moving forward.
To my left I have Una Hassenstein, Executive Director at the Department of Business, and to my right is Louise Comeau. Louise is the Manager of Financial Services at the Department of Finance, serving the Department of Business. With your permission, Mr. Chairman, we will substitute staff as needed to ensure the questions are answered. If there is any ability to keep to Crown Corporations one at a time, that would be great, but if not, we have no issues switching folks in and out as well, but for the ease of flow if we could go one corporation at a time if possible.
MR. CHAIRMAN: Whatever works best for the folks around the table and I’ll be pretty lenient in this room.
MR. MACLELLAN: Sounds good.
Today, our government is proud of the budget introduced last week by the Minister of Finance and Treasury Board, Karen Casey. We believe it strengthens the services and supports for Nova Scotians; we believe that it provides investments in health care, education, and in communities; and we also believe our government is creating an environment where business can thrive, where business can grow, and where young Nova Scotians can find opportunity right here at home.
Government’s role in the economy, led by the Department of Business, is to create the conditions for private sector growth. That was the principal task given to us when the Department of Business was created in 2015. It was also one of the chief recommendations of the ONE Nova Scotia Coalition. We take that role very seriously - it informs our thinking and it guides our decision making. Together with our five Crown entities, and Invest Nova Scotia, we are advancing a common economic agenda - we are focused on strategic economic growth and on creating the conditions for success, and we believe our efforts are paying dividends.
We have record-breaking tourism numbers. We just celebrated our fourth consecutive year of tourism growth. In 2017, a record-breaking 2.4 million visitors came to the province, generating an estimated $2.7 billion dollars in tourism revenues. In 2017, merchandise exports grew 3.7 per cent, or $193 million, to $5.42 billion over 2016.
Nova Scotia was also Canada’s leading exporter of seafood in 2017 with nearly $2 billion worth of products sold to international markets. Our exports to China have tripled since 2013, from almost $200 million to more than $600 million in 2017.
Our ocean sector is growing and our start-up community continues to grow as well. We are a leading jurisdiction in North America for social enterprise development and growth. All of these sectors and more have a role to play within the growing Nova Scotian economy. All of us, entrepreneurs, businesses, banks, universities, colleges, social enterprises, government, and Crown Corporations must work together to ensure economic success.
Together, we will support and enhance one another; together we drive success. Take Events East - this is the organization responsible for managing the new Halifax Convention Centre which opened its doors in December. The new convention centre is experiencing phenomenal growth thus far. This year the centre will welcome over 100 events and more than 80,000 visitors. These events and visitors are expected to inject up to $50 million in the Nova Scotia economy.
Canada’s brewers are coming here in May, as well as the Federation of Canadian Municipalities. In May, we will have tourism operators from around the world at Rendez-vous Canada. And this is just the beginning of the guests who will come to this province. These events will not only attract conference delegates, but spouses and family and their friends. They will shop here, eat here, travel across our province and explore all points of Nova Scotia, Cape Breton, in particular - that wasn’t in the notes, Mr. Chairman, I just said that. - more importantly, they get to know the strengths of our entire province and region.
The convention centre is a platform for growth, creating an environment for more businesses and tourism operators to start and to grow. The work of Tourism Nova Scotia complements and supports Events East. Tourism Nova Scotia, in partnership with the private sector businesses and tourism operators, develops world-class experiences to help motivate travel to this province.
I mentioned Rendez-vous Canada; it is Canada’s largest travel trade marketplace. Let me set the stage for the committee members - in mid-May, almost 1,900 tourism professionals from 30 countries will be in Nova Scotia. There will be nearly 600 tour operators and travel agents, and they will hold sales meetings and get a chance to see our province for themselves. Tourism Nova Scotia will host tours to allow delegates to experience the different regions of this great province; businesses will see an immediate boost to their bottom lines, with delegates spending money on experiences, hotels, food, beverage, and shopping. Over the long term we expect more Nova Scotia vacations to be sold by tour operators and travel agents around the globe.
China is a key market for us, and 2018 is the Canada-China Year of Tourism. Tourism Nova Scotia will work with an in-market representative in Beijing to develop and implement a sales and marketing strategy for Nova Scotia. It also helps that the province has committed $11.1 million towards an air access fund, led by the Halifax International Airport Authority.
We want to increase direct flights to key markets around the world such as China, Europe, and North America. Our goal is to build on the successful 2017 season - a record-breaking season, and attract more first-time, high-spending visitors from across Canada, the United States, Europe, and China.
The conditions continue to be favourable for tourism, with global travel on the rise, and positive exchange rates and gas prices encouraging visitation within and to Canada.
The conditions are also favourable for Nova Scotia’s innovators to continue to grow and succeed.
Innovacorp is Nova Scotia’s early-stage venture capital organization. It finds, funds, and fosters innovative Nova Scotia start-ups that strive to change the world. Innovacorp is especially interested in start-ups in information technology, digital life sciences, clean technology, and ocean technology sectors. The goal is to help those companies commercialize their technologies and to succeed in the global marketplace.
Our province’s start-up ecosystem is already vibrant, and Innovacorp connects and partners with all of the participants in Nova Scotia’s start-up community. Needless to say, this keeps the Innovacorp team pretty busy.
Take venture capital investment, for example. In 2017-18, through Innovacorp, the province invested $7.8 million in Nova Scotia start-ups. This investment leveraged an additional $31.7 million from the private sector - the majority from sources outside of Nova Scotia - for companies like Appili Therapeutics to develop antibiotics to fight drug-resistant bacteria, and this money allowed Proposify to enhance its proposal-writing software and continue its growth which includes plans to double its staff to 60 individuals this year.
In the year ahead, Innovacorp will continue to be an active seed-stage investor in our province. Along with venture capital investment, Innovacorp provides hands-on business guidance to the companies it invests in. It also delivers world-class incubation services and facilities, places Nova Scotia’s technology entrepreneurs call home.
In the year ahead, about 25 promising companies will reside in Innovacorp’s incubation facilities. These companies will employ about 325 people - people working on drugs that treat superbugs, develop technologies that monitor remote infrastructures such as communications transmitters, and coming up with a better way of screening for breast cancer in women.
Along with investment and incubation, Innovacorp delivers programs to help start- ups launch and accelerate their growth. For example, Innovacorp’s Spark competition in 2017-18 received 136 submissions from across the province; winners benefited from financial support and expertise from seasoned business people. Innovacorp will run Spark again in the year ahead, and Innovacorp will also run several acceleration programs for Ocean Tech, Cleantech, and MedTech ventures. We’re also actively supporting start-ups in Cape Breton. Our momentum initiative will enhance the assistance offered to Cape Breton start-ups, providing access to entrepreneur and residents, acceleration programs, training opportunities, a makerspace, mentorship, and networking events.
These connections will also take place at Innovacorp’s incubator at COVE. This start-up yard will help enable early stage companies to commercialize their ocean technologies and succeed in the global marketplace; it is also another way that we are reaching to connect innovators and businesses from around the province.
COVE is located in Halifax but it connects the oceans community around Nova Scotia and the Atlantic region. COVE will connect all of our universities and colleges around Nova Scotia and it will serve as a connecting point for our small- and medium-sized ocean businesses. It is a piece of strategic economic infrastructure and that is why we have asked Waterfront Development to lead COVE. Waterfront Development has expertise and experience in this area and works with the private sector and public partners around the province. On COVE, they will work with NSBI, Innovacorp, Dalhousie University, NSCC, and others to grow our oceans economy.
They will continue to grow the waterfront properties for which they are responsible, like the Halifax waterfront. It is the most-visited tourism destination, a place of entrepreneurship where we celebrate our community and tell our Nova Scotia story to the world. Last year we welcomed more than 2.5 million people to the Halifax waterfront.
In Lunenburg, where our visitation continues to grow, we see important investments made in marine infrastructure and key projects on the horizon. This working waterfront is being revitalized and there is new and growing marine industrial activity led by innovative private sector companies. There are also significant developments on our waterfront like the Queen’s Marque project which will, among other benefits, create more than 7,500 square feet of new public space. These are clear examples of waterfront development building a solid platform for business through development of high-potential land which supports strategic sector growth.
Another one of our Crowns aimed at building growth is, of course, Nova Scotia Business Inc. NSBI is focused on export development and investment attraction - that’s the business of selling Nova Scotia to the world and selling the world on doing business here in Nova Scotia. When it comes to export, NSBI’s mandate is twofold - increase the volume and value of exports coming out of Nova Scotia; and increase Nova Scotia’s crop of new exporters. NSBI has continuously evolved the way its staff deliver export development services to help exporters succeed at any stage of growth or any size.
One example is the Marcato Festival in Sydney. Marcato’s specialty is the global live events market. The company worked with NSBI staff to identify key markets and regions where Marcato could focus its marketing efforts; they also received travel and logistics support to attend trade shows, meet clients, and make important connections. Marcato has more than doubled its sales travel, leading to exponential growth in revenue.
Underlying many activities is the Atlantic Trade and Investment Growth Strategy which is designed to grow export and boost foreign direct investment in the region. The federal government and the four Atlantic Provinces have committed to working hand in hand to increase the number of exporters, the value of export sales, export markets, and boost foreign investment in our region. The program has been approved for $20 million and the in-depth and strategic planning is well under way.
Looking ahead, NSBI will continue to grow the economy with new programs that recently launched and are continuing into the new fiscal year, programs such as the new Innovation Rebate Program that is being expanded to this year, a program that will incent companies to make large-scale capital investments such as adding new production lines; the Cambridge Scale-Up Hub in Boston, which provides Nova Scotia Firms with sales and contact support and new opportunities in the U.S. marketplace; new research opportunities for businesses through the Productivity and Innovation Voucher; and in partnership with industry associations and government, a pilot project where we will put productivity experts into local businesses for 30 days.
Companies like IMO Foods of Yarmouth have benefited from this program, resulting in growth to our regions. These are the types of smart programs that benefit Nova Scotia companies.
It is also important to remember that our export companies can pick up the telephone and call NSBI. NSBI staff will help firms navigate the funding programs and get the right answers that they’re looking for.
NSBI also administers the Nova Scotia Film and Television Production Incentive Fund. Since 2015, the fund has approved 89 productions with $39 million in government funding commitments, with an estimated $140 million in Nova Scotia expenditures. The budget for the film fund this year is $20 million, which reflects applications approved to date, and projected application volume still to come. NSBI continues in engagement with the film and television production industry and administered the Nova Scotia Film and Television Production Incentive Fund in a client-focused, transparent, timely, and effective manner.
We look forward to continuing to build our relationships in this creative sector as we partner to highlight the stories of productions that are made here in our province. It is also important to note that no film production has been turned down for eligible funding. We continue to look at how we can grow this industry, and we continue to engage the stakeholders as we look to grow this part of our creative sector.
I also want to mention that Communities, Culture and Heritage plays a role in supporting the industry and emerging artists. In January of this year, CCH announced the Screenwriters Development Fund, a new model to increase Nova Scotia content in the film industry by supporting local writers and producers. This fund encourages the creation of new scripts and production ideas to bolster the creation of local content using Nova Scotian filmmakers, writers and producers. The fund also encourages diversity and gender parity within the industry and supports expansion of global markets and audiences. The value of this fund is $262,000.
It is also worthwhile to note that in an effort to foster stability within Nova Scotia’s film industry, the province is investing $238,000 annually into Screen Nova Scotia. This ensures that the sector has a dedicated film industry development agency. These are just a few ways that the Crown Corporations are helping to grow the Nova Scotia economy.
I also want to mention our specific and significant investments in innovation, social enterprise, and connectivity. Our government continues to invest in innovation because we know that this sector represents a tremendous opportunity for growth. I mentioned earlier that we all have a role to play in this growth.
The same model applies to the innovation sector. Government’s role is to enable entrepreneurs to have access to conditions they need to succeed and to create more space for collaboration through investments in research and education, co-working spaces like incubators and hubs, and access to capital. That is why we continue to invest in spaces like Volta. It is why we invest in emerging innovation districts in Halifax and Sydney, and rural innovation hubs. It is why we fund Invest Nova Scotia. It is why we continue to look for ways to enhance the amount of venture capital coming to this region.
We know that entrepreneurs with new ideas and a determination to succeed are transforming our economy. Start-up companies are building smart, innovative products that are being exported to the world. They are also creating job opportunities for other Nova Scotians, particularly young Nova Scotians. We will continue to look for ways to enhance this sector.
Social enterprise also has a role to play in our growing economy and building a stronger province with better services. Government is committed to working with social enterprises to enable them to grow, create jobs, and improve social well-being. These organizations provide new ways of tackling complex challenges. They create opportunities for our young people and increase the vibrancy of our communities, not only in rural areas but throughout the province. Increasingly, business people are choosing the social enterprise path. Nova Scotia is a leader and a trailblazer in this emerging sector.
We have been working with the Social Enterprise Network of Nova Scotia - SENNS - various government departments, post-secondary institutions, ACOA, and others to implement joint strategies to support the social enterprise growth we are looking for. Our new budget continues to set aside $300,000 for advancing initiatives related to the framework for advancing social enterprise.
Finally, I want to mention our recent investment in rural high-speed Internet. Our government’s investment in high-speed Internet is significant. We have identified $120 million in a rural high-speed Internet trust, money that is set aside to ensure that our communities are connected. This investment will leverage dollars from other levels of government and the private sector. The task is large. An estimated $300 million to $500 million is the finish line as we speak.
Once our Last Mile report is complete this Spring, we will have a firmer handle on the overall costs, but the reality is that the province can’t complete this task alone. We need to work with our municipal partners, our federal partners, and the private sector to ensure that rural high-speed Internet connections are made quickly, efficiently, and with appropriate oversight and accountability. Those details will be forthcoming as the trust begins its work and establishes the appropriate parameters for these investments.
Today I invite you to join me in once again recognizing the significant investment made by the province to grow high-speed Internet across Nova Scotia. We know that a strong broadband system is an economic game-changer for Nova Scotia. We want all of our province to be connected to opportunities anywhere in the world and to have the tools they need to compete, to grow, and to win.
With that, I thank you for listening to my opening comments and open up the floor to questions.
MR. CHAIRMAN: Ms. Paon with the PC caucus.
MS. ALANA PAON: Good afternoon. It’s nice to have this opportunity to chat with you again. It’s not even a year gone by, only six months or so, and we’re here again. I apologize - I can’t see you because my glasses are on top of my head. They’re either on top of my head or in front of me, but the print’s so small on this, I think they’re going to have to stay on top of my head.
I think everybody is familiar, if you have been listening and following in the House, with my pleas for cellular coverage across this province. I know that there is an investment that is going into a trust of $120 million, as you have just mentioned, for rural Internet. It’s a great start. I think that’s a wonderful opportunity for our province.
My concern is that cell coverage still remains a huge issue, and there’s nothing in this budget to connect us in a different way. As much as it’s wonderful to have broadband service, I just want to put it out there that we really do need some major work in this province to make certain that we become connected through cellphone service as well. The future is mobility, not being hard-wired into a building. Most of us now obviously do most of our work on our cellphones as we are travelling about the province.
Regarding rural Internet - I will start with that. The government has set up a trust fund as the vehicle for delivering rural Internet. Why was a trust fund the preferred mechanism as far as the investment of this money or place to park this money temporarily?
MR. MACLELLAN: As usual, I’m going to kind of freestyle on my perspective here as to how we landed on the trust and how it will be operated by an arm’s-length Crown Corporation in a piece of the Crowns that we have in place now. There will be some tie-in with some specifics of our current Crown structure.
At the end of the day, this became an increasing problem. To back up a little bit, I know the members here have heard me say this before, but we were among the leaders in the federation at $15 million per year for broadband. Looking at that, the number, which was a significant investment comparatively, was just inching us along literally. The fact that we had this opportunity by way of the royalty agreement and some additional revenue that came to the province by the way of the arbitration, this became an obvious opportunity for us to make a large investment to get to that echelon of up to $500 million that we have to reach to ultimately get service to 95 per cent of Nova Scotia customers by way of fibre op and the remaining 5 per cent by way of wireless and the satellite technologies that exist.
We looked at that, beginning with the big investment and making this large drop into the broadband file and moving forward immediately and understanding how we would make the most of our federal Connecting Canadians program and how we would tap that money for Nova Scotia and as well as the private sector to try to pull them in. Quite frankly, Nova Scotians would be better served by having this at arm’s length.
In the conversations and the leadup to the Brightstar report on the middle mile, which is available, and the last mile, which will be released in the Spring, the Department of Business always warehoused the broadband conversation. We have some tremendous people in the department who are experts in this field and in this area. There was really no structure around how we would operate this once the budget became available to us.
We don’t have the expertise within the Department of Business to have that broad a conversation and that complex a conversation inside the department. We have great people who can lead it from the government perspective. We need arm’s length establishment in terms of a structure that could reach out to the communities, which would largely be driven by municipalities. The honourable member could look to her own backyard and talk to the municipal representatives, and they could tell you where the problem spots are and where the focus should be. I think every member in the Legislature could do the same thing.
To get the information from municipalities and understand what the priorities would be around the middle mile, which is the backbone that feeds in the communities and then going from there, we needed an arm’s length group to pull that information together to manage the back and forth, the conversations that take place from MLAs into municipalities, how the applications would work, how we’re going to coordinate with the federal government, and what private sector providers, both large and small, would be coming to the table. We hear from the bigger players that are here in Nova Scotia about what their involvement could potentially be. But we hear a lot of start-up companies, satellite companies, and companies with different levels and different options for technologies always coming to us to say, we have a business plan here, we have a case to be made, we can supply Shelburne, or we can supply Digby or Annapolis.
When all these things are coming at us at once, with a large allocation of money, it just made more sense to put it in a Crown Corporation type of setup to administer that. That’s what the genesis was. Again, we can sort of have our experts from the Department of Business quarterback it from the government’s perspective but at the end of the day, it’s arm’s length, separated people who will ultimately drive the bus here and make good decisions and make sure that we’re getting this right.
I guess a similar aspect of their own identity and that distance is why the trust came into effect as well. Rather than have it as a department budgetary item that hits the fiscal wall at the end of March and then rolls over to April 1st, this is a continuing budgetary allotment that is, again, separate from the government books so there’s more flexibility. Obviously, there will be a structure around how that money is spent and how it’s allocated, but it just gives that Crown Corporation more freedom to make decisions quickly and, quite frankly, not have it run through the government processes, which can be very cumbersome.
So to have an arm’s length third party professional to administer it and also to warehouse the money, vis-à-vis the trust, seemed to be the best model and method that we could come with. It does align with the recommendations Brightstar made around how we would administer this money.
MR. CHAIRMAN: I’m just going to call order for one minute. I’m not going to interrupt every time to announce you, unless there’s a change in speakers and/or it’s time to change caucuses. To give you a chance to have a much more relaxed conversation, I won’t interrupt unless I need to.
Carry on, Ms. Paon. The floor is yours.
MS. PAON: I can’t recall the last time that the government set up a trust fund for this type of purpose. I understand it was something of an antiquated practice. Are you aware of the last time that such a fund would have been used?
MR. MACLELLAN: Yes. We actually utilized that practice about a year ago. We have a research trust which is about $20 million, give or take. Again, there is a similar mandate and rationale behind that, just to get it away from the somewhat challenging restrictions of government, sometimes, in moving money along. If we have established an entity that has the ability to carry this out with integrity, with openness and with transparency, which we have - and it will be the same thing for the Internet broadband trust - then it just makes more sense to do it that way. There is precedent in that, in the last mandate, our government put together the research trust.
MS. PAON: It’s an arm’s length Crown Corporation. With a trust of this sort, and you had mentioned the research trust - I don’t want to make any assumptions, but will the broadband trust be set up and managed in a very similar way? What is the governance model on reporting and on managing trusts of that sort? Who is going to manage it and that type of thing? Can you give me some information about that?
MR. MACLELLAN: We will look at the model for the research trust. There could be some overlap in terms of the structure and the template that we use for the trust. Largely, we are in the process now of detailing exactly how it will work in terms of what the funding process is and how it’s all laid out.
I will say, on a personal note, that the chairperson of the new Internet trust is a lady by the name of Margaret MacDonald, who I have some experience with. She was here working at the deputy minister level a few years back. She is extremely smart and extremely capable, and an extremely proud Nova Scotian, who would come back to this for all the right reasons. When her name arose around the potential for her to be the chair, I certainly was encouraged by that. She will do a great job, and it will be an operation, an entity, again, full of integrity and openness. Every dime will be accounted for, and every decision will be accounted for as well.
With the arm’s length nature of this, having someone like Margaret at the helm is tremendous. I can assure the member and all Nova Scotians that, as the trust and the Crown Corporation structure materialize, we will be sharing that information so people not only know how to apply but also how the structure works and how the funding will flow.
MS. PAON: Again, I am just trying to flesh this out. The research trust, could you just use that as an example of how that is governed and managed? Maybe if we go through that, I can have a better idea of how this is all going to work.
Since the trust fund is going to be put under third party control, which is what I understand, that there will be a third party control on this, is it not that, under the Finance Act, money is no longer considered public money when it is put in a trust of this sort? You have public money that has gone into a trust and is no longer considered, under the Finance Act, as being public money. It’s a big chunk of change, obviously, to change from public monies into some other entity.
I really would like to know what the oversight structure will be. It’s not to question the former deputy minister’s capabilities in any way. I would just really like to know. It’s a lot of money, and I’m sure that the general public would like to know how this will be managed and the oversight into this. I would have thought that that would have been done in advance of putting such a large amount of money into a trust to begin with.
MR. MACLELLAN: I certainly have the highest level of comfort and assurance that this will operate exactly as we all expect that it would. Look, in this day and age, with anything in government but certainly a third party arm’s length trust that would be operated by a Crown Corporation, we would absolutely anticipate, expect, and again, be resigned to the fact that this money will be properly spent. Again, every single dime will be accounted for. Because of the ability to set up the trust to start to work on the Crown Corporation structure, which will ultimately administer this fund and work with the providers, the stakeholders, and everyone who has a vested interest in broadband; because of the nature by which it became available and because of the absolute pressure that everybody feels - this isn’t just a government challenge; it’s for every MLA in the House to get going on broadband, and enough with the red tape and the studies to put together a plan 24 months from now - this would be the way to get it rolling.
In terms of having a template, the research trust would serve as a model to a certain extent. However, the research trust is under Labour and Advanced Education. We don’t have any input or any interaction with that specifically through the Department of Business, but I can tell you that these things will come together in a hurry. How they’re administered, what the public engagement and communication piece is, how the tenders will go - clearly, we’ll have input and direction from our department of procurement. All of these things - the t’s will be crossed, and i’s will be dotted, without question. The whole point of this is that there’s freedom and independence with respect to how decisions are made. Certainly, oversight is how we create the public confidence. With the conversation around broadband, it always becomes about public confidence.
This isn’t a political statement in any way, but when it was announced back in 2007 that everybody would have Internet connection by now or long before now, I don’t think the government of the day did that intentionally. I don’t think that was playing politics in any way or intended to be negative. I think that they believed in it. I think that it was a goal that any government should strive to. In fact, making the announcement sort of put them ahead of their time in terms of their commitment to it.
However, it’s such a complex problem, and it still is. Again, with a price tag pegged at $500 million for a province of less than a million people, it’s a big challenge. For us, this became entirely about finding the right plan, the right template. That’s just by way of conversation about what has worked and what hasn’t, what kind of resources we have in government versus what we could do by way of a trust and an arm’s length operation.
We feel very comfortable with where we are in terms of getting to the point where we have the right plan in place. I think that the public will be very much attuned to this.
As far as partners, the private sector again realized the importance of this because they operate in this space. The interesting terminology we use - I referenced in Question Period last week that the reason why we don’t have better coverage is because of a market failure. That’s how it’s described. Basically, that providing broadband in some areas is just not worth the massive investment for companies. That’s for any company - large, medium, or small. So we have to do some of this heavy lifting, and that’s what we’re going to do. Again, the private sector is going to play a role, and they’ll take some risk as well. At the end of the day, we need a backbone, and the government and the taxpayer are going to have to play a major role in getting there.
The federal government will share in some costing and some funding as well. They’ll break it down per capita, like so many other federal programs, so we’ll get our share of that per capita.
Really, when you look at the administration and, ultimately, the success of a broadband initiative of this nature, the trust and the third party entity - it’s going to be the municipalities that are really going to have to step up, and they certainly will. Quite frankly, in terms of knowledge and understanding of what has to be done, I know that they are ahead of the curve. I think if you talk to any of the municipalities under the UNSM here in the province, they could give you all kinds of ideas on which is the best way forward. They are going to have their opportunity to bring them to this third party entity and tap the Internet trust program so that we make the most of our investment and utilize their expertise and their history with broadband challenges that tell us the right way to go.
We don’t have that finalized program yet for the Internet trust and how the Crown Corporation will work, but we’re getting there. Again, I want to assure the members that the only motivation here is to get this right, spend the money properly, and leverage every dollar we can. At the end of the day, if we can provide Nova Scotians with better broadband access, then it will be worth the money that we spend.
MS. PAON: I have concerns, as I am sure the people of Nova Scotia would. I’m sure that the people of this province, first and foremost, want to make certain that their money is properly and well spent and that the oversight is there to make certain that every single dime obviously goes where it should go.
As much as I think it’s valuable to have freedom and independence as far as being able to put investment where it needs to go in rural Internet, I’m hearing of a Crown Corporation that doesn’t exist yet. I’m hearing about $120 million that, from my research, is no longer public money under the Finance Act once it’s put into a trust. This trust doesn’t have a governance model yet. It doesn’t have a management model. It does have one person who seems to be on board as far as taking the lead.
I find this very worrisome. This is a large amount of money. Not even having a Crown Corporation set up yet or a governance model for how the checks and balances are going to be measured to make certain that everything is going to be managed properly at the end of the day - I find that worrisome. Is this not worrisome to you at all, minister?
MR. MACLELLAN: No, it’s not worrisome at all. If you look at our five Crown Corporations, they have fullest confidence, respect, deference, and appreciation of myself personally, our government, and our department.
Again, this isn’t about touting our government. It’s what has happened over the last few years with the mandate and the personnel at our Crown Corporations. In my opinion, with the Crown Corporations and Invest Nova Scotia, we’re seeing success. We’re seeing leadership with their respective mandates. I think they’re doing amazing things.
If we get into specifics on any of those, I think they speak for themselves in terms of what they have accomplished. Just like our approach to the private sector, our approach to Crown Corporations has been similar. These are the people who know their respective areas the best, so let’s give them the platform and the environment to do their job and then get out of their way, keep the politics and the meddling out of it, and let them lead. That’s what we have seen so far with the Crown Corporations and with Invest Nova Scotia, and we’ll continue to see that.
When we talk about a Crown Corporation, we’re looking at some of the mandate around what that Crown oversight of the broadband funding could potentially be. It doesn’t necessarily mean a new Crown Corporation. That’s a cumbersome, long, very daunting process, and we have to get going right away. We’re looking at the mandates of our Crown Corporations now to see where the fit is.
It isn’t going to take long to put together that structure or the Internet trust structure. When you have $120 million allocated and dedicated, it’s relatively easy to put together the plan. Again, in terms of oversight, in terms of expertise, in terms of credibility, and in terms of accountability, we have those structures in place already. I have absolutely no doubt on the trust piece or on the Crown piece that we will be best served, that when this ultimate structure comes out - and it will be in very short order - the members of this Legislature and Nova Scotians will be able to have confidence and faith in what has been put together.
Again, the motivation here is to get this right for everyone. There is no politics. There is no inside agenda other than getting as much broadband to people as quickly as we possibly can and get that service level up for safety and security first and foremost, and then for the growth of our rural regions from an economic development perspective.
To answer the question, I’m not concerned at all. With the government interaction with the people who will create this structure, I know we’ll get it right. This money will flow as quickly as possible, with the highest level of scrutiny and integrity, as the money goes into communities and brings broadband to the doorsteps of more Nova Scotians.
MS. PAON: This Crown Corporation which we still have to see develop is still just an imaginary entity that exists only in the minds of those who are thinking about it. Is this Crown Corporation just going to be set up for broadband service? Do you foresee that it will actually be set up for other investments as well? I’m trying to get an idea of what that will look like.
MR. MACLELLAN: Those are the discussions that we’re having now as we go through this process. We have a number of strategic infrastructure pillars in the province. I think that becomes the focal point. So if it’s broadband, if it’s facilities, if it’s particular locations, or if it’s anything that’s building public infrastructure that we’re investing in, that’s becoming the new conversation.
Outside of our traditional schools, roads, hospitals, and bridges, there is strategic infrastructure that we have invested in. Again, we have made a number through our previous budgets, through this budget. Look at how we invest in those fundamental operations, like Volta, COVE, and the Internet - not only the investment in it and administering the investment from a procurement and RFP perspective, but then once they’re built and once they’re established, and the management role. It’s one thing to put these things together and create the funding elasticity, but then once they’re built, what’s the interaction with Crown Corporations?
So to answer the question, I think we have a number of emerging strategic publicly funded entities, sites, and enterprises. We need the right structure to manage those.
MS. PAON: I’m hearing the term “building public infrastructure,” which is music to my ears. I know that we just had an arbitration windfall through the process that just occurred, and that’s basically what’s allowing us to put this investment forward for broadband service. When I hear about building public infrastructure and strategic infrastructure development, we all know that broadband and cellphone service and all those kinds of basic infrastructure needs are holding us back in this province. It’s likely going to be the things that we invest in that will make all the difference in this province as far as future economic development.
Hearing about building strategic public infrastructure, where do cellphone towers lie in that? I could foresee that cellphone towers and that kind of infrastructure, if that’s the type of Crown Corporation you’re looking to build, should be included in that strategic public infrastructure. Would the minister agree with that? Could you elaborate on that for me?
MR. MACLELLAN: I think it’s certainly worth exploring. I know you have a meeting Wednesday with the Minister of Municipal Affairs that we could participate in and start that dialogue.
Being from Glace Bay, believe it or not, we have never had challenges with cellphones or broadband. I know people think we still don’t have cellphones down in Glace Bay, Mr. Chairman, but actually we do. We have never had service issues. Between broadband and cellphone service, we have always been very lucky, obviously because of the industrial location and where we’re at.
To be quite honest, I didn’t even understand broadband was an issue until I came here in 2010. To hear the member talk about how her constituents are impacted, not only by lack of cellphone coverage but also the landline piece was actually surprising. I didn’t realize. I think it was areas like Loch Lomond, which is not far from where I’m at, that have tremendous challenges with those things.
To answer the question, I think this is the time to have that discussion to figure out the Department of Municipal Affairs and the EMO aspect of this. This certainly is an emergency safety issue in terms of having connection to a cell or a landline. It’s also a conversation that includes the Department of Transpiration and Infrastructure Renewal because of the radio capabilities they have and the system that they have in place, which utilizes those towers. I think that it’s going to be part of that conversation, so that’s something that we could explore. Again, you have brought that to the forefront.
I think of places like Cape Breton, and it’s one of my favourite parts of the province. When you go to the North Shore - Ingonish, Meat Cove, and up that way - safety of course is paramount. That’s number one, and I know that the member brings up those issues around safety and accessibility for communications. But just in terms of economic growth, tourism is staggering up there in the peak season and shoulder season. To think that you have to go to certain places at certain times in Ingonish and in Victoria County across the board to have access for cellphones, to have certain strengths - I don’t know too much about their broadband download capabilities, but I’m sure things like Netflix would be difficult with certain pressures on the system. These things would be revolutionary if we could bring broadband to places like northern Cape Breton and all counties that are deficient in broadband access. I think it’s the same conversations around cell service and towers.
My limited understanding is that if the towers are being put up for broadband, then there would be an ability to use them for cell service as well. I know that that member had said in the House that broadband and cellphones are a separate conversation, and that’s for sure. Some of the satellite start-ups that have come around since the broadband announcement was made are basically offering all of it in one package, but they need that tower coverage to be able to do that.
Again, it’s an ongoing conversation. Through this process, if we can tie in towers that would create cell access, then that’s certainly something we’re looking to explore. There would be no reason why we wouldn’t.
MS. PAON: I think my ears have just perked up there. Have you committed to coming to the meeting that I’ll be attending with the Minister of Municipal Affairs on Wednesday at 9:00 a.m.?
MR. MACLELLAN: I guess I have no choice now. I’ve said it out loud. Cancel my massage. I have a meeting at nine o’clock. (Laughter)
Sure. I haven’t checked the schedule. I don’t want to open my phone. I did make the commitment that we would follow up. If I can make it, I’ll certainly get there because it is an interesting conversation, and it’s in earnest. It’s something that we should be talking about, so I’m happy to do that.
MS. PAON: Perhaps you can try to get Minister Hines at the table as well, since he is with TIR. I’ll look at that suggestion later on. (Laughter)
As far as downloading speeds - I do understand that the tourism is staggering on Cape Breton Island, and I commend the minister and his department for increasing tourism on Cape Breton Island. But in some areas obviously, it’s not quite as staggering. We are having issues in some sections of Cape Breton. Cape Breton is a very large island, and we speak about tourism as the Cabot Trail and going towards Inverness - beautiful areas.
I just want to remind the minister that there’s a whole other area of the province that I live in, Cape Breton-Richmond, and I’ll come to those tourism questions later. I won’t pose those now because we’re somewhere else in the conversation.
I would like to just remind the minister that the Fleur-de-lis Trail used to be a huge part of the tourism strategy, and this is where all this is happening. That’s where all this infrastructure is lacking. They’re getting hit hard in Cape Breton-Richmond, in some areas of the municipality and in the constituency. I’ll thank the minister in advance if he can come to that meeting on Wednesday.
I think I have hit you enough on the rural Internet and trust issue, although I can’t promise that I won’t come back to it in the House with something in Question Period.
I would like to move on to the sharing economy if we can right now. I understand that the minister set up a working group to study services like Airbnb, VRBO and - what was the other one? I think it’s Uber. Can the minister provide an update on where Nova Scotia stands in relation to the sharing economy and what he sees as the short-term and long-term prospects of these services for province?
MR. MACLELLAN: That’s a great question. It’s complicated. I’ll go through some detail, and then I’ll pause and you can jump in and as a supplementary.
There are some representatives from Tourism Nova Scotia here. Michelle and Michael, I know we have talked about this at great length. The purpose of the working group, again, was in earnest to try to figure out what exactly we should be doing as government to get this right. For once surprisingly, it has nothing to do with investment directly. It’s more around policy. Tourism Nova Scotia and most people who are connected to tourism in any way realize a couple of things.
Number one, regardless of what policy we put together and how we shape this, Airbnb and the sharing economy are here to stay. Not only are they here to stay, but they’re going to grow. Think about the things that we didn’t anticipate that were seemingly impossible 15 years ago. Platforms like Airbnb give people the ability to rent out their rooms, their homes, and their cottages without really anything other than the Internet. It’s such a growing and emerging part of a critical industry sector for us, and we have to try to figure out what the best way forward is.
Again, it’s going to be part of our tourism complement. In fact, $2.7 billion in revenue is tremendous, and we’re gaining ground to get to that $4 billion by 2024 in tourism revenue. But we could also see a bit of a plateau if we don’t do some creative things. One of them is around the sharing economy and how we harness that. Second is around what I mentioned in my opening comments around air access and having direct flights to major centres and getting people here easier and quicker. They’re key parts of that.
With the sharing economy piece, clearly there’s a distinction. If you’re a traditional tourism operator and you have had accommodations for a few years, 10 or 20 years, it’s a family generational business. You have paid taxes, you have paid for upkeep, you have been subject to countless reviews by people who have stayed there, and you have had inspections and oversight and rules that you have to follow. All of a sudden, along comes this new platform, Airbnb or any of the other similar options that are there for the sharing economy.
Again, people can just jump on a site, register, and put a room up for rent. You can pick the time period. You can pick the duration. Obviously, the price is something that’s relatively unregulated. The interesting part - this is the fascinating part of this for me - is that there’s no rating system other than just the market forces.
If you are renting out a room or a home or a floor, you are subject to the reviews that are going to come from the people who utilize your spot. It’s an interesting self-governed beast that has really come out of nowhere. There is no regulation, other than the natural rules of market supply and demand and the fact that you are controlled by the people who stay there and what their ratings are. If you have a number of bad ratings on Airbnb, it will impact your ability to rent that space. There’s no doubt about it.
So that’s part of it. The other part clearly is, how do we identify what the thresholds are for what we’re okay to leave unregulated? If you are a person in a rural area - or if you are in metro and you are in an urban spot - how should government interject and play a role, and to what extent? If you have a room or you are heading away for a couple of weeks and you want to rent your home, should that be subject to taxation? Should it be subject to regulation, inspection, all those things? People have differing opinions on that.
If you’re a developer who has a number of condos and you have them open and you want to rent it for the summer, many people would say that’s a very different conversation. That is not the open, unregulated part of this sector that people want to see unregulated and allowed to happen as online transactions with none of that taxation added and sort of an honour system of what’s collected by way of revenue.
The working group itself is a collection of private sector people - representation from TIANS, of course. This conversation really crosses many departmental jurisdictions. There are a lot of people from different departments at the table, not only business.
It is something that we are continuing to flesh out. Every meeting of the working group takes a different spin, a different dynamic. With the Hotel Association and people part of that “traditional” system of accommodation - traditional operators - they’d like to see some kind of regulation, and I certainly don’t blame them. There is a sweet spot that we have to find here in terms of how we do this, and if it’s policy and regulation, then that’s what it will be.
Like everything else, the trick of it for us is to just find some kind of common ground. I think we can really whittle it down and get to the crux of the issue, and then we’re going to have to make a decision around those things, such as - again, I use the example of taxation. We’ll have to figure it out, one way or the other.
It’s going to be a big part of tourism revenues over the next four, five, or 10 years. We are trying to work with the people who are directly impacted by the realities of the sharing economy, and trying to set the right platform that works for everyone to the extent possible.
MS. PAON: Thank you, minister. It’s an interesting comment, that that’s going to be a large part of the tourism revenues. I am familiar with Airbnb and VRBO and how all those things work. In fact, I’ve travelled using these different platforms myself. It certainly opens up a whole world of opportunity for people who don’t want to stay in regular hotel rooms to have a bit of a different experience.
It also opens up opportunity for cottage owners to be able to maintain their cottages that perhaps they wouldn’t be able to afford. I do know that there is a difference between renting rooms or a physical cottage commercially and renting out a privately-owned cottage, at the moment, through Airbnb or VRBO.
It is going to be a bit of a tricky situation, I would think, because it’s a fine balance. I think the minister mentioned finding a sweet spot, because we obviously don’t want to cut off the possibility for revenues that keep people’s homes or cottages - or maybe even a senior renting out a home or a room to someone who is travelling from New Zealand or elsewhere. It could actually be helping that senior stay in their home, as well.
When it comes to tax revenue - which, of course, the government likes to be able to access - how do you foresee, and is there any indication from the working group, how the commercial and residential tax rates would be looked at from utilizing the sharing economy, specifically for accommodation?
So you have commercial cottages down the road, four cottages that are completely licensed and are paying commercial tax rate, and then you have a cottage owner a kilometre down the road in the other end and they’re paying residential tax rate and renting out their cottages for probably, sometimes, about the same amount of time per year. Can you comment on that?
MR. MACLELLAN: Listen, that’s exactly it. To the member, this is precisely the problem. Again, I completely appreciate that perspective, that you’re in competition, so to speak - private-sector/market competition - but the fact of the matter is that right now, the scenario you just laid out is exactly what’s happening. You’ve got people paying residential versus commercial who have not only - I mean, the tax rate is one part of it, and that’s certainly a significant hit, but it’s also about the requirement to have renovations and retrofits of accommodations, the processes for licensing that they have to go through, all of the marketing and the advertising that they have to do - social media, of course, but traditional as well. All of that comes into it.
It’s the dichotomy between that person in Isle Madame who during the busy summer month has a home that they want to rent out versus someone who has a condo unit, condo building, and they want to rent it out in downtown Halifax. They’re two very different things. I guess the problem becomes - and the reality is, and I referenced before - about the plateau of tourism revenue.
For the tourism industry - for TIANS, for Tourism Nova Scotia - this becomes an issue of capacity. It’s quite simple. Again, this is me speaking in very general terms. I don’t have the science and the numbers that say this, but at the end of the day, if we’re going to go from $2.7 billion to $4 billion, it’s - I don’t know for sure that we would have the capacity to get there that fast without using the shared economy platform.
We have tremendous accommodation operators in the province. This is not about the quality. This is just about the numbers. Again, looking at the member’s riding of Cape Breton-Richmond and all the tremendous tourism attractions that they have there, looking at places like Glace Bay, we don’t have a hotel. We have one bed and breakfast, and that’s it. Looking at the remote parts of the South Shore, all up around Digby way, every part of the province - we don’t have to get too specific here. It’s everywhere. There are issues of capacity that we can’t expect the traditional tourism accommodation providers to fulfill. They just don’t have that ability, and we can’t ask that of them.
This becomes about the capacity issue. It becomes about a rural employment issue. That’s the whole nature of this conversation. We have to get this right.
I have great respect for the traditional accommodation providers that we have from one end of this province to the next. We’ve got to treat them fairly. That’s the point of this, and that’s why we wanted TIANS to be part of this, to give us their perspective on where we should go. Also, like so many other things, this becomes about jurisdictions and who has the best practices, who does the best things. The major cities and centres across the country have been dealing with the shared economy at significant levels for a lot longer than we have. It’s emerging everywhere, but it’s coming here quickly.
When the conversation began around the TIANS conference and how we would get this working committee put together, we just wanted to figure out how we would solve some of the problems as quickly as we could and as best we could. Again, with this emerging sector and the fact that it does - it’s a very delicate system. We do need it, but we don’t want to harm our traditional accommodations providers. We wanted to have this discussion before more people entered this platform unregulated - and again, not everyone who uses Airbnb or a shared-economy platform is unlicensed. That is important to know. It is not always that way, but that does exist.
It’s a complex question. We aren’t leaning one way or the other. We don’t have all the answers with respect to this, and this was precisely why we made the commitment to put the working group together and just see what our best way to figure it out is.
MS. PAON: Thank you, minister. I understand that your working group that’s coming around the table is quite large, and that’s good. You get all kinds of different perspectives and sometimes really good information from the more the merrier, and sometimes it’s a little bit difficult to come to consensus on things, I’m sure.
As far as the sharing economy coming, it is already here. It’s definitely here. If we go onto Airbnb or TurnKey - I think that’s another one - Halifax and the whole province are listed on these sites. These are formal sharing-economy sites where you can list your accommodations, but there are those other ones like Kijiji and Craigslist and whatever else exists out there, where people will continue to put accommodations for rent, either for seasonal rental or full-time rental. I’m talking seasonal here, most of the time, for tourism.
It’s just that the mammoth amount of work or regulation, or however that is going to look, to try and actually stay on top of all these different sites that sometimes pop up overnight - to be truthful, I just can’t fathom how that is actually going to look, and what that sweet spot is going to be at the end of the day to try and strike a balance provincially.
So if it is going to take adding in the shared economy to get us from this $2.4 billion mark to that $4 billion mark in 2024, what’s new? If the sharing economy is already here - if Airbnb is already here, VRBO, all those are already here - how is adding that in contributing to significant growth? Are we just kind of adding receipts that weren’t there before to be able to achieve that number?
I don’t see where the newness comes in, because this is something that exists here already. Perhaps we are just not tracking it or not being able to take advantage of those numbers or tax revenues from it. Where is the newness from this sharing economy? How is it that you see that we are actually contributing anything new to tourism by adding this in?
MR. MACLELLAN: What’s new in terms of using the shared economy, or what’s new?
MS. PAON: Well, to get us from that $2.4 to $4 billion in 2024. If we are going to need to add the sharing economy - especially specifically in accommodations - we already have the shared economy here, so adding it in is nothing new.
It’s just adding it in, right, as another line number. I don’t want to say it’s adding in a false numeric towards that $4 billion, but it’s just that we are not taking advantage of that number as of yet, as far as that increase to $4 billion. So where is the newness?
MR. MACLELLAN: I think the newness is that it’s relatively - again, it’s arrived. There’s no doubt about it. The shared economy is here, but I certainly don’t think it’s maximized. I think we are just at the beginning. That’s the whole issue for me, and that is why, when we talked about what the motivation was, the motivation was that we are speaking with representatives and members of TIANS and talking about this working group. The motivation is we have to get some kind of parameters and some kind of control around how we are going to do this, because we certainly have not reached the limit.
Shared economy might be here, but it’s not to the maximized numbers that it is going to be. I think that the more ability, the more access, and the more activity we see in the shared economy, the greater that need for potential regulation is going to be, and the greater the relationship and the partnership with Tourism Nova Scotia as it relates to Airbnb around marketing and around working with that platform to maximize our tourism experiences that we are really becoming known for.
That has really been a focus for Tourism Nova Scotia. Dining on the Ocean Floor in the Bay of Fundy and things of that nature - that’s one of many.
The bottom line is - and this is just me sort of thinking as I talk, which probably scares a lot of people behind me - if you look at the growth in tourism and you look at the numbers for accommodations that are tracked, again, I don’t know if there’s a direct correlation between the explosion of people and revenue and the accommodation increases we’re seeing.
In other words, to one of your comments, I think that we aren’t tracking it to 100 per cent because it is such a fluid system right now. I think that’s the other part of it around this conversation about regulation and what we’re going to do moving forward. We’ve got to have some kind of parameters around tracking but also around what the rules for taxation and the rules for being a participant in the shared economy are.
What’s new is that the demand on the province for available accommodations is growing. The demand and the requirement for increased capacity - we’re seeing the trajectory. It has arrived, but it’s not as big as it’s going to be. So you’ve got to figure out how you maximize that, and at the exact same time, there is concern. I do have concerns about the traditional operators and how they are impacted. Again, it’s one thing if you’re looking in a remote area of Nova Scotia and you’ve got someone renting out their home. That’s fantastic and there’s no harm. But if you are providing shared-economy accommodation and have the ability to avoid taxation and things like that, and you are competing with hotels that have remortgaged to provide renovations and retrofit that is aimed at bringing more people in, they are going to be impacted.
At the end of the day it is a private sector operation and it is a supply and demand world that we live in, certainly with respect to tourism, but at the same time, if this is a new-age technology that is providing this platform and increasing our capacity, we’ve got to at least do our best to figure out what that balance and that fairness that we can establish are.
MS. PAON: Thank you, minister. Am I correct in saying that last year we had a 2 per cent increase in room nights sold? Is that correct? I’m trying to remember the number.
MR. MACLELLAN: Yes.
MS. PAON: So if we have a 2 per cent increase in room nights sold, I’m just trying to figure out the calculation of where we want to go. That’s traditional rooms, obviously people who are paying commercial tax rate. They’re the hotels, and I’m assuming B&Bs are included in that as well. Is that correct? No?
What is included? Could I just get what is included in that?
MR. MACLELLAN: Thanks for the question. I was talking with Michele Saran, she’s the CEO of Tourism Nova Scotia. Basically, beginning this year, 2018, we will be able to track everything. That includes a shared economy, what has sort of come around as a clear impact and entering into the conversation about capacity and our ability to provide accommodations for people. We will have a clearer picture moving forward. That is a good thing.
One important piece of it, though - which makes sense - is that accommodations are only one factor around this overall discussion. Obviously Nova Scotians are travelling the province and using various forms of accommodation as well, so the key number through Tourism Nova Scotia and what’s really critical for the industry is the visitation numbers. By way of the exit surveys, we’re getting a clear picture of what people did, how they spent, where they stayed, the duration of their visit, and related information that gives us clear science and analytics around what we should be focused on. That guides the strategic development and the plan for the years coming forward.
That’s one part of a larger discussion, but the accommodations piece and the discussions around it will continue to evolve.
MR. CHAIRMAN: Order, please. The time for the PC caucus has expired.
Again, please keep the conversation between you going. If that works fine, I’ll leave it as such.
MS. CLAUDIA CHENDER: I want to thank you, minister, and your staff - all million of them - for taking the time to be here. I’m always shocked at how this room fills up when business is called.
At the risk of playing musical chairs, I thought I would just follow up on a couple of questions I also had about the sharing economy. Specifically, as my colleague has said, and as you’ve acknowledged, the sharing economy is here. It’s everywhere. There are issues, which I think have already been discussed, about discrepancies between cottage owners, for instance. I think that’s a great example.
One question I have is, if we are acknowledging that this is part of how we get to that $4 billion goal, what incents traditional tourism operators to remain that way, frankly, and to continue to bring in the taxation required?
I’ll piggyback on that and say that the other core question that I have about Airbnb, - from a constituency level, but also from talking to folks across the province - is how it impacts the affordability of the rental market in Nova Scotia. We know that we have an affordable housing issue.
In places like downtown Dartmouth, which is part of my constituency and is growing rapidly - which I understand is somewhat unusual, but is certainly the case for us, and seasonally I think it’s happening in other places, as you acknowledged - we are seeing a huge issue with affordable rentals for folks like students, low-income wage earners, people like that. Airbnb is just squeezing what’s left right out of that.
I’m curious whether the working group is also considering those issues and whether you could comment on that as well.
MR. MACLELLAN: Without a doubt, that is part of the discussion with the working group. There was a representative from Airbnb at the very first meeting, and a lot of his anecdotes and jurisdiction and experience are from the GTA - from Toronto. That’s certainly relative to Nova Scotia, and I don’t discredit the member’s experience in terms of the housing pressures in Dartmouth. I’m sure it’s very similar in Halifax as well.
This became a very huge issue in Toronto out of the gate because of exactly that. People can rent their homes, unregulated - of course for a premium, for the most part - while the affordable housing market and the people who are impacted - and quite frankly, are struggling to have a roof over their head - are impacted by that.
So that is part of the discussion. What I think emerged was that, while it’s something we have to be mindful of, relatively it was a greater challenge that they had to figure out in Toronto - which was helpful for me, because we now have that experience and we can see what they did. Using that jurisdiction to try to figure out how they regulate it so those things wouldn’t happen, so it wouldn’t impact the affordable housing market, will be extremely valuable.
Again, when you create the comparison between one person renting their cottage, whether it be rural Nova Scotia or here in the HRM and surrounding areas - coastlines for sure - in isolation it doesn’t impact the traditional accommodation providers, but over time and as the increase of activity takes place, it will. That’s the concern of the previous questions from the PC caucus. Airbnb and the sharing economy have arrived, but they have not arrived to the full impact yet. I think it’s very fair to say that.
With respect to the accommodations, it has been an issue for the working group. They’ve established that - how do we identify who is utilizing these types of platforms in a way that’s not beneficial for the overall economy and not providing that sort of pure accommodation piece - that addresses our problem with capacity at least somewhat.
People renting their homes - that’s great, go for it. People or commercial developers renting their homes and their condos or apartments or what have you, unregulated and untaxed - that’s a challenge. That’s how we get to impact (Interruption) Michele said that that scenario is less than 1 per cent of the total.
But again, we’re going to have to pull all this information together and utilize that for the final decision.
One of the things I can tell the member with the working group is that it’s such a large committee of representation. Unlike the smaller groups, it is a lot of people around the table and they have vested interests that are much different than some of the others. I think the challenge for us is going to be to pull all this information together, organize it in a way that’s kind of structured, and identify what the challenges are. Affordable housing is a great example of the challenges we have to guard against and identify what the opportunities are. Ultimately we’re going to have to share that information, get it out there to Nova Scotians, and we’re going to have to make a decision. That always falls to government.
It’s important to get this right, to get all the aspects of the shared economy and traditional operators and figure out what the right mix is. That’s what we’re going to have to do.
To your question about the traditional accommodations providers, it really becomes an issue of the natural economics of supply and demand. I think when you look at the hotels downtown, the peninsula and surrounding areas, in Dartmouth, leading out towards Clayton Park and as you spread from metro and get into the other counties and municipalities, people have choice. It becomes about the options that are in front of them.
As I said in my opening comments around this topic, this is a market that really governs itself. If people have a bad experience and they write about it, that becomes a significant challenge for those shared economy participants, so it’s one that will continue to evolve.
The hotel operators and the traditional accommodations people who are at the working group, who have had influence and had the ability to have a say there, share that concern. They’re also very up front about the fact that it is a changing dynamic. It’s a changing market. They have to adapt.
Again, when hotels and motels and bed and breakfasts have to adapt, that usually means they have to invest, which becomes that additional risk when they are competing against people who aren’t having to do any of those things.
It’s a challenge, no doubt, and I know that finding the right place to land that accommodates everybody will be challenging, but that’s what we’re tasked to do and we’ve got to try to get there.
MS. CHENDER: Thank you. I have two follow-ups, but I’ll do them separately.
To your last point, I appreciate that. I appreciate that reviews play a role in helping the market to regulate itself. As a consumer, that’s great; as a legislator, that’s more challenging.
I think what I’m getting at is not so much - I mean, hotels are hotels, but in our rural areas - again, back to my colleague’s example of cottages - if you have someone who’s running summer cottage rentals as a business, but then down the road there are a number of independent cottage owners who are renting, if I were that person, I would change my business model. As you say, they have choice. If I do that, then that’s a net loss in tax revenue and regulation for the province.
I guess I’m specifically asking, in those kinds of scenarios, leaving hotels aside, is there a strategy emerging around how to prevent that?
MR. MACLELLAN: That’s what we’re trying to determine through this working group. Michele just gave me a stat here that is staggering to think about, how this is all coming together with respect to accommodations and the shared economy. Our needs assessment said that as a province we need 8,000 more rooms to reach $4 billion.
If you look around, even from the hotbed of development - which is where we’re at now, and you know, Dartmouth is doing pretty good itself and so are some of the other areas around metro - but when you get out into rural Nova Scotia, we’re not building that capacity. I think it’s fair to say that with some of the hotels, they’ve got to spend every dime to maintain their current capacity, so adding to that is extremely difficult and it is wildly expensive.
We have to somehow try to figure out - look, there’s also a fine line between unregulating an industry like this and allowing the shared economy to come in and provide those 8,000 rooms that we’re short, and at the same time, to your point, how do we glean some taxation that we would consider to be fair?
It is about the traditional tourism accommodation providers and it’s also about that taxation that we’re, “leaving on the table.” At the same time, I do harken back to people in rural areas who are renting their cottage out. I think that’s a good thing and I think that if it meets the needs of getting closer to the 8,000 rooms and people on fixed incomes who have the opportunity to rent out their bungalow, I think it’s great.
MS. CHENDER: Thank you. That’s a good segue into my other follow-up. Back to affordable housing, you mentioned the GTA. In your response to the member, I think you also mentioned that you’ve been doing a jurisdictional scan and studying, but I’m not clear what the lesson from the GTA was.
Just by way of example, I think both to the former question and to this one, I have a good friend who lives down the block from me and has an income suite in her house. She said to me, “Listen, what do you think of Airbnb?” I said, “What do you mean?” She said, “Well, our tenant is leaving, and we would make three times as much money if we used our suite as an Airbnb rental than if we rented, but as a progressive and responsible person, I feel a little ethically torn about that, because I know that there’s a need for an affordable rental economy.”
Most people don’t think that way, right? Most people don’t have the luxury to think that way. They can’t. They have to meet their bottom line, and they’re going to do it the best way possible. So if that’s the situation, specifically in the metro areas - again, is there a plan for looking at that and regulating in that way? I understand the working group is meeting, but if you have anything specific, out of the GTA or anywhere else, that would be helpful.
MR. MACLELLAN: Thank you for that question. It’s a very good one. The example that you use about the friend who was torn, that’s exactly what happened in the GTA. So admittedly the representative from Airbnb broke it down to, we had people - these developers and the owners - making choices about, why would I do this when I could do this and make more money, and then invest and bring in more shared economy participants, clients, customers, visitors. That becomes the problem.
I don’t have anything specific in terms of where we’re going to land on that yet. That’s part of the working group’s endeavour. Fred Morley, who has been the Airbnb person for the department, so to speak - he’s looking at that as well to see what the impact is.
Anecdotally, we don’t have a lot of indication that it’s playing a negative role to the extent that happens in Vancouver, Montreal, or Toronto, but we’re concerned about it. Again, it would be something that would impact metro more so than anywhere else, I would think. That’s just my thought on it, but we’ve got to be mindful of that. That’s the type of thing that we’ve got to guard against, from a government perspective. We can’t be taking affordable housing opportunities away because of the shared economy piece.
MS. CHENDER: Just a last question, then. Are there jurisdictions that have appropriately or successfully regulated to stop that trend that you or the working group have looked at or studied?
MR. MACLELLAN: Basically, in some of the other jurisdictions - and again, we’re looking at the best way to apply what we see and what we’ve heard from other places to here - a lot of those specific parameters, or the plan, as you say, are around bylaws. It would be municipal bylaws. They would set things like the number of days that you can have it as an Airbnb. There could potentially be fees built into a municipal bylaw that would be applied for Airbnb.
From the provincial level, obviously we can use the Legislature to set the formal rules and laws that govern the shared economy. Again, taxation will be part of our jurisdiction, but in many other places they’ve solved that. Thinking back, the representative who was referring to the GTA a lot - it became about how they really honed in from a bylaw perspective to identify that. If you limit the time period that an Airbnb can be rented, for example, that would hopefully have an impact on the vacancies and the occupancies and what openings are available for things like affordable housing.
MS. CHENDER: I’ll move to some more general questions about the department. You mentioned that COVE is in Halifax. I’ll correct you. It’s actually in Dartmouth. Certainly, in Dartmouth South we’re excited about COVE and we’re following with great interest.
When you expand more generally into what I think you called the “innovation sector” - which I’m guessing is start-ups and entrepreneurship - I just have some questions.
There’s a lot of excitement about this in the department. There is a lot of discussion about it. But drilling down a bit, can you say, for instance, how many start-up businesses we expect in this fiscal and subsequent years, based on the investments that are targeted in that area?
MR. MACLELLAN: Una is going to get some specifics around that, but in the meantime, I’ll just say that COVE - as everyone knows - is in Dartmouth. It’s one that we’re very proud of.
It has just been a remarkable learning experience for me, with respect to our ocean opportunities and the tremendous tie-in from two of my departments, the Department of Business and the Department of Energy. With respect to what’s about to happen off our coastline here, from the traditional industries of fishing and what that has created for us - domestically, of course, but it’s our leading export now. The research involved in a number of different areas of fisheries, aquaculture, oil and gas, tidal energy, and the renewables that exist in the ocean - it’s remarkable what work is being done with autonomous underwater vehicles. The staggering number of options for products and services connected to plant life that’s in the ocean, using seaweed for fertilizer - seaweed has dozens and dozens of applications. All of the components of research, development, and innovation are really going to be warehoused in COVE.
I’m just getting some of the specifics around COVE, the Centre for Ocean Ventures and Entrepreneurship - the capacity there. So basically the number we are using as the template, the benchmark, is 12 at any one time.
MS. CHENDER: In COVE?
MR. MACLELLAN: In COVE, yes.
MS. CHENDER: Just to clarify - I hope I didn’t send you to unnecessary trouble - we did have a chance to talk to them in Public Accounts Committee recently. I was talking more generally about the innovation sector, so start-ups in the province as a whole.
MS. MACLELLAN: The number we have got - there have been over 400 start-ups in Atlantic Canada. A lot of those have been directly or at least somewhat connected to oceans, but obviously there’s the tech sector for innovation as well. That would be outside oceans - we’re just getting another number here.
The total number for Halifax and Sydney, specific to those innovation districts, is around 200, so 200 start-ups that are taking place. Again, that’s ocean, and it’s related to other IT ventures and sectors.
MS. CHENDER: So that’s 200 in Halifax and Sydney, and then presumably 200 elsewhere in the province?
MR. MACLELLAN: Exactly.
MS. CHENDER: Does the department have short-term, long-term targets for numbers of start-ups? Again, with the level of investment that we see in this broad category of innovation, just so the rest of us can follow along, what are the benchmarks we’re looking for in terms of the number of start-ups? Or if there’s another benchmark you’re using, that would be helpful.
MR. MACLELLAN: We’re just working on the specific numbers of what the targets would be for start-ups. Again, I think back to the anecdotal information that I have.
We will probably have to get back into - there are a number of different categories and boxes and charts here that have different numbers.
Number of enterprises by growth in employment is 120, and growth by revenue is 310, so there are a lot of different metrics that exist under these various programs. I don’t want to get too complicated into numbers until we know them for sure.
Again, just sort of anecdotally, the focus that I’ve seen in my experience with the innovation districts, whether they be in IT, health services of course, oceans - which is really emerging as a tremendous opportunity for us - it just becomes about creating that environment to foster innovation. I know that is the buzzword sentence of all time, but it’s actually true.
If you talk to government and us and the department, you always have to try to figure out exactly what you are looking - what is your number of start-ups? I can tell you that the people at COVE, the people at Volta, Dal, CBU, New Dawn in Sydney, they don’t think about, oh, we’ve got this number of 16 in the next three months or we’re not going to meet our target. For them, it becomes about who are the good people, where are the good ideas, where’s the capital coming from, where’s the venture capital funding going to be raised? It becomes about sector development and it becomes about specific areas that they are focused on, and that’s really it.
I would never - these real people who operate in the private sector and play in the venture capital space, I wouldn’t ever ask them to give a specific number on how many we expect, because this becomes about opportunity, it becomes about performance, and it becomes about mentoring entrepreneurs to be better and make profit and commercialize big ideas.
While certainly the numbers are critical, and looking back over the course of the year to see what the performance has been is important, I think that it really is the nature and attitude of the innovation sector that really drives the development and the growth there.
MS. CHENDER: Thanks. I do appreciate what you say about it being about big ideas, because I think the content is where we will ultimately judge, not the number of start-ups.
On the other hand, we are talking about public investment. I have some familiarity with the venture capital space, and I happen to know that they measure things quite precisely. I guess my question is, if we are looking for guidelines about how our public funds are being spent, if it’s not the number of enterprises, then what are the metrics that we are looking for that you are measuring and that you are delivering back to us so that we can measure the impact of that investment in a simple way?
MR. MACLELLAN: Just as a correction, or maybe a clarification, I certainly wouldn’t suggest that venture capitalists aren’t measuring every dime. I certainly can appreciate that any time there is risk of that magnitude, they are calculating it, as they should be.
I was more thinking about the innovators and the people at that incubation level who are sort of driving the bus, who are not fixated on that part. I probably misspoke there. I don’t want to suggest that we are not tracking, because that’s the key piece and you’ve got to explain to the taxpayers how you spend their money. Certainly, without question, we have to be tight on those things.
I think that when you create venture capital funds like Build Ventures or any of the other - whether it be physical facilities like COVE and sites like Volta, you have to be able to show and give an indication of what the performance is. Are we wasting money, or is it being well spent? Without question, you’ve got to drill down into those numbers when the year is finished and see how many start-ups took place, what materialized, what was commercial, what went public, where the funding was leveraged, were there other VC players that came in to scoop up an idea or scoop up a product or service?
Obviously it’s all measured. We’re going to try to figure out what the specifics are in terms of how many we funded exactly. I’m sure Innovacorp would have some information on that. It’s certainly based on the general principles of growth and risk and all those things, but without question, we’ve got to be able to measure that and we’ve got to be able to prove to Nova Scotians that it’s a good idea.
MS. CHENDER: Okay, so I guess that’s all sort of like a post hoc - like did it work? - but when you’re going into these investments, my question is, what are your benchmarks for a successful investment? And how are you measuring and reporting them?
MR. MACLELLAN: Thank you, Mr. Chairman. We do have an investment policy in place. It looks at things which obviously make sense - intellectual property, the quality and the experience, the whole complement of the management team, and of course, expected return. But as you know, it’s a rear-view mirror once it’s spent and the investments are allocated for a particular idea or entity enterprise. Then we see what the return could potentially look like.
Anecdotally, so with Innovacorp again, with the Atlantic Venture Capital Fund that we have, we really rely on industry significantly. The men and women who are leaders in this field - we’ve got people who provide a lot of information, a lot of data, and a lot of advice. When it comes to innovation spaces and how we invest there and in individual companies - really, it’s people. We’re investing in people. How we do the Build Ventures fund with our counterparts in the other Atlantic Provinces, what ultimately are the guiding principles around where we spend, how we spend, and who we invest in - really, we rely heavily on Innovacorp and the people there and the private sector venture capital people who come forward and want to participate in these conversations and want to give us some direction.
MS. CHENDER: Shifting to jobs, do you have an idea or a benchmark in terms of how many jobs will be created in this start-up environment as a result of this investment, either in new or existing businesses?
MR. MACLELLAN: Are you referring to overall, like one global number? Any specific investments?
MS. CHENDER: I think we have a $156 million budget. Is that right? Is that the accurate number? I mean, I guess in the department in general, I would say what is the job creation number that we’re looking at as a result of the investments that we’re making?
MR. MACLELLAN: Obviously, with the Crown Corporations - whether you’re talking Innovacorp or NSBI - when they make investments and their envelopes for job creation, they would have some specifics. We can try to do a global tabulation to see with all the funds that are allocated and budgeted for with respect to the myriad of programs that all the Crown Corporations have. We can try to find that overall number, and maybe then by Crown and by sector, and we can bring that back.
MS. CHENDER: That would be great. Also, just to understand how that’s tracked in a global way by Crown Corporation - or if it isn’t, how it might be - just so that we understand the investment-to-jobs ratio. It would be great.
MR. MACLELLAN: Okay, we’ll try to find out how we can pare down to get that number.
MS. CHENDER: Into the budget a little bit here - I was curious, under Waterfront Development, just to understand - I’m sure there’s an explanation for it, and I’m on Page 4.6 - that we see a $2 million overspend forecast to the estimate, but then the estimate for 2018-19 goes from last year’s $20 million to $2 million.
MR. MACLELLAN: That spike associated with the budget to where we come back to a lower number is with respect to the project and the costs associated with COVE. There were a couple of things specifically. There were some IT pieces and some water supply investment that brought that number to a significant level. Now it comes back down because COVE will be completed, and Queen’s Marque as well. There was some cost attributed to Queen’s Marque. Both will be off the books, so to speak, and we’ll be back to that current number.
MS. CHENDER: In the section on department and Crown relations, there is a $6 million reduction in department and Crown relations, but then there is a $6 million overspend last year. I’m just curious about how those numbers work out - $10 million to $16 million to $3 million.
MR. MACLELLAN: The decrease, the negative change, is connected to the Capital Investment Incentive. That is coming to the end of that program.
The increase with the variance analysis estimate - the forecast - largely, the increase was connected to the air route access funding, which was the $11.1 million that was just added. That’s the differential there. To answer the question about the reduction, it’s largely around CII, the Capital Investment Incentive.
MS. CHENDER: Just to be fair, the Capital Investment Incentive is over, so that’s why it has been reduced. The air link, what created the overspend?
MR. MACLELLAN: The negative change was around CII, what we anticipated would be allocated, that wasn’t. That’s the CII piece. Then, yes, the air route access was the addition on the variance analysis.
MS. CHENDER: I also noted there’s an extra $600,000 allocated to Innovacorp. I’m wondering if you could expand on what that’s for and how the impact of that spending would be measured.
MR. MACLELLAN: That increase of $600,000 is attributable to two new programs, one being the business start-up support program, which is around specialized marketing and sales, and the other is the Start-Up Yard at COVE, which would be about $90,000 additional. The business start-up piece is $485,000.
MS. CHENDER: Do either of those have measurables attached to measure the impact of that investment? If so, what are they?
MR. MACLELLAN: With respect to the deliverables for the business start-up support, there are a number of factors they’ll use - IP protection, sales, prospective new partners, and revenue. Those will be the metrics that they’ll use. For the Start-Up Yard at COVE - COVE is connected with the Ocean Supercluster. Essentially, this will be about early stage ocean technology companies commercializing their products and services. After this is up and running, and we’re supporting companies, the metrics will be in how many were accessed, how many were supported, and, again, the overall measurables like revenue, employment growth, commercialization, and those things. There will be specific deliverables and metrics that support that.
MS. CHENDER: I’ll probably spend the remainder of this hour on rural Internet. My colleague the member for Cape Breton-Richmond canvassed the area pretty extensively, but we still do have some questions.
When I had the chance to ask the minister about this in Question Period, I believe that the minister responded that the middle mile infrastructure would be public infrastructure, which may have been a slip of the tongue. I know we’re waiting on the last mile report, but based on what we understand, who do you foresee owning the middle and last mile Internet infrastructure that’s built as a result of this investment?
MR. MACLELLAN: Who has the technical ownership will have to be identified as we set up the new trust and the Crown Corporation. By no means is that a cute way to explain that we’re going to give it to the private sector, but we just don’t want to admit it. It doesn’t work that way.
With the current broadband structure that we have, the private entities that are involved, that have participated in this, and tried to access or have accessed federal funding have really taken on a lot of the risk and a lot of the costs associated with building what we call the backbone. That’s what has to happen to get to where we have to be with broadband, with 95 per cent or as many Nova Scotians as we can with access to broadband.
This won’t be infrastructure built for private sector operators who will have a monopoly, and we won’t be able to utilize the infrastructure that’s paid for by the taxpayers of Nova Scotia. The bottom line here is, just like other physical structures that we have in the province, we’re going to build it as a way to support an industry sector or a service that we have to provide. If we were building and investing in COVE, then obviously there are players and incubation companies, start-ups, that are going to use that. They may earn significant profit and sort of identify that their model used COVE as a platform to develop the product or service they are going to make money off of. That’s a similar investment.
We’re going to invest in the middle mile here and look at the fibre op backbone, then engage satellite and wireless providers to see what they can do. This is not in any way an investment that will have some kind of massive windfall for a private operator at the expense of taxpayers. This just becomes about building the system to provide broadband.
MS. CHENDER: When the funding announcement was made, the Premier said that investments would be matched dollar for dollar by other funders. That leads me to the question of who these funders are. Are you anticipating only federal and municipal dollars or that the private sector would also be part of the matching dollars for this?
MR. MACLELLAN: Again, I know the member has heard this. I used this term in the previous answer to the PC caucus, and I think I have said this to her in the Legislature during Question Period. Market failure is the key phrase here.
Kent Peters is with us from the Department of Business. He identifies that the 3 to 500 is the market gap. This is something we have to do as government. It’s a question we have had from all members, including our own caucus. If providers aren’t giving a service to a certain area, then it’s incumbent on government to fill that gap. That’s exactly what this is.
How we work out the investment will be something that we’ll do through the trust and through the Crown Corporation structure. Municipalities are going to have a key role to play here and look at the ownership pieces. What are they going to invest in? Municipal units will make investments, and the feds will make investments. Looking at these numbers, it will be the province that will do the heavy lifting.
On the ownership piece around the infrastructure and the private sector, there are things that remain to be determined. Obviously, if they’re not investing any money here, and it becomes about government putting this in place, then we will have parameters, expectations and deliverables around things like scalability. Over the next 10 years, if there’s a major investment in this middle mile, what kind of rules are we going to put on the service providers who participate to increase the capacity to make sure they are holding up their end of the bargain?
This is really about a gap that exists. There’s just no business model that could be put into place here to provide the Nova Scotians who don’t have broadband with that service. It falls to government, and it’s going to be three levels, but it will be the province first and foremost.
MS. CHENDER: Just to clarify, when the Premier says the investments made by the provincial government will be matched dollar for dollar, he’s talking about other levels of government?
MR. MACLELLAN: I don’t know . . .
MS. CHENDER: My question to you was, at the announcement of this funding, the Premier said these investments will be matched dollar for dollar. What I’m trying to understand is, is the private sector going to be bringing money into this project, or are we going to be paying the private sector, as you say, because there is a market failure to do it?
MR. MACLELLAN: I just wanted to defer to Kent here. I wasn’t at that media event, and I don’t know what the Premier said about dollar for dollar, so I can’t really confirm that particular comment.
To be absolutely clear, we’ll need the Internet service providers to come forward and to play a role with their capacity and with their capabilities. Quite frankly, this is a market failure, so we wouldn’t anticipate that the private sector - if one private sector operator is willing to pay, and the others aren’t, then obviously that puts them at a significant advantage. From what I have learned, I can’t fathom any situation where the Internet service providers are going to put money here with such an unrealistic business model so unfriendly for their operations. This just doesn’t make sense from a private sector perspective. Again, we’re covering that gap.
We can get clarification around what the Premier said. I know that a lot of his comments were around leveraging, but I can’t confirm that he said dollar for dollar.
MS. CHENDER: In Question Period, and I think in other conversations, you have also mentioned that the middle mile infrastructure would need to be accessible to anyone to build that last mile. There are two different scenarios here. One is that this backbone gets built, and then there are a variety of other companies, organizations, municipalities or whoever it is come together to create these last mile opportunities that actually connect people. Or there are last mile deals that are leveraged to create a middle mile solution. By that I mean, we’ll build the middle mile if you promise us the last mile, and then we get that subscription revenue or whatever it is that comes from that. I’m wondering if you could speak to me about where you are in your thinking about that.
MR. MACLELLAN: As we have seen in the Brightstar reports, it seems as though the middle mile investment will cover the numbers they have identified. It will cover 95 per cent of our requirements by way of this middle mile investment. The final 5 per cent is the last mile piece.
With respect to your scenario, or the example where you would almost have an agreement with municipal units or through the municipal units with service providers, that certainly remains to be seen. I couldn’t verify that that’s exactly what’s going to happen, but that’s what I anticipate happening. I think that every case will be unique. As I have said many times, ultimately it’s going to be the municipalities that are really going to drive the bus. They’re on the ground and they know what their collective communities need.
There is an opportunity. It could be to work with an ISP that’s entirely focused on fibre op with one of the satellite options. That remains to be seen as well.
I appreciate your direction about ownership and access and those things. One thing I do know is that this is a lot of money on behalf of the taxpayers. We not only have to get it right in terms of the decision-making methodology and how we get there, but it has to be wide open. People have to know exactly what decisions we made, exactly who was funded, and exactly how those dollars flowed. That’s the least we can do. With a conversation of this magnitude and this sensitivity, people have to know how we’re spending their money.
MS. CHENDER: I am aware that time is about to elapse, but just to clarify, at this point, the anticipation is that there would be a variety of options for that last mile infrastructure, i.e., that people would not be locked in to a deal with whoever the middle mile provider is for that last mile.
MR. MACLELLAN: I think that is a very fair place to come from. Again, if we are going to build this backbone, the middle mile - there are the questions and the concerns. Are we just giving this money to private sector players who are going to create a firewall and a monopoly and not let anybody on it unless they pay a premium and a royalty? Again, that just can’t happen.
We have to have the proper planning in place that guards against that and a system, a mechanism, whereby that just won’t materialize in that way. We’re not going to pay for hundreds of millions of dollars in infrastructure that people can’t get to . . .
MR. CHAIRMAN: Order, please. Time has expired for the NDP caucus for this hour.
MS. KARLA MACFARLANE: I don’t want to belabour the Internet issue that we are all desperately trying to find answers about, but I have been asked by my municipality to clarify.
I understand that there is an investment of $120 million. I am still am not clear, is that $120 million from the province? Okay, so is that being matched federally?
MR. MACLELLAN: Leveraged.
MS. MACFARLANE: My next question is, what does a municipality have to do to scramble to make sure they’re going to get a piece of that money, in particular, the Municipality of Pictou County, for the residents of Pictou West - for example, along the north shore out towards River John?
I think we often underestimate our knowledge-based industries here in this province. On one particular road, Mountain Road just outside River John, there are five businesses. Actually, their road has just recently been deemed the road from hell, if I may say (Interruption) No. Okay, sorry. It was in the newspaper. We have five businesses on this road. They come in to the library in Pictou to have access so they can do their banking and all their orders and everything. They want to know, Karla, when are we going to get high-speed Internet? The county is working hard with them to try to move forward. We just want to know, what do we have to do to be the first in to get this?
MR. CHAIRMAN: Order, please. Parliamentary language does apply here. However, I’ll reference it as a place in a different context, and we’ll allow it this time.
MS. MACFARLANE: I really appreciate that. I should have listened to my inner dialogue. I wasn’t going to say it, so thank you.
MR. CHAIRMAN: I’ll turn it over to the minister. Ms. MacFarlane, I’ll let you know, it’s just back and forth. I’m not interrupting.
MS. MACFARLANE: Thank you.
MR. MACLELLAN: Basically, the trust that was established, that $120 million, which will be leveraged from municipal units and from the feds, that’s really just the funder. Then it will be the third party Crown Corporation organization that decides which projects will advance and create the conditions and parameters around what projects we’re looking at doing and what makes the most sense for municipalities. The member wasn’t here at the time, but we talked about the importance of the municipalities leading this because they know best what is needed in their communities.
One question that I have probably had repeated is that exact question around how quickly we have to get this in to get ahead of everybody else. Because of the structure and the way that we will disseminate this money over time - and the fact that it is a trust, so there is a bit more fluidity in the time in which we can access and release that money - there won’t be a race to get it in, or you won’t have the opportunity. When projects come forward from the municipalities through this Crown Corporation and access the trust’s funding, they’ll be based on merit. I’m sure all of them will have merit for municipal units. There will be that vetting process, and then the decision will be made to what extent the funding will be provided.
As soon as we’re up and running and the system is in place, they’ll be able to bring that forward. Then it will be judged without any sort of speed requirement to get it in quickly or they’re going to miss the opportunity. That won’t be the case.
MS. MACFARLANE: Would you or someone from your department be willing to set up a meeting so that you can come to Pictou and meet with the councillors and discuss what the actual process is so that we can clearly hear from your department what exactly it is that we are supposed to do?
MR. MACLELLAN: Yes, for sure. That’s to our advantage. I think it’s fair to say that once it is established, we want to get out and have these exact discussions and say, this is how it is set up, this is how we proceed and bring it forward. The sooner the better for us as well.
MS. MACFARLANE: Okay, great. I want to move on to tourism. We like to think that Pictou West is a destination. For those who may not know, we are also in the area where Northumberland Ferries comes into Caribou. We’re one of the entry points into this province. From May to October, we actually see approximately 600,000 passengers. That’s quite a large number.
In Nova Scotia in the last few years - and congratulations to this government - we are increasing our tourism dollars. However, the North Shore has been down a little bit. Sadly, we had our information bureau closed and taken away from us. Because of our remarkable tourism director Cindy MacKinnon, we rallied around that, and we have been able to use the building. We have had volunteers come forward, and we have kept the tourist bureau open on our own.
However, we lack a marketing levy, unlike other areas in this province. Since I have been elected, for close to five years, I ask the same question every Fall session and every Spring session. When is our area going to get a marketing levy like Halifax and like Cape Breton? Cape Breton’s levy is now taking over $1 million to market Cape Breton - fabulous. They do a great job. We just want an even playing field. We are denied and we’re denied and we’re denied. I can never get an answer.
We have everyone onboard. I’m just wondering why no one is helping us to have a marketing levy that other places in the province do.
MR. MACLELLAN: I want to welcome Michael Johnson to the table. We just had Kent Roberts here. I called him Kent Peters. I said, if you’re not Kent Peters, who is Kent Peters? He said, I don’t know. Sorry about that, Kent Roberts. You are a good man doing a good job.
Anyway, Kent Roberts has departed, and Michael Johnson is here.
I know the member had asked me this before, and it was Michael who provided me the information the last time and listened without question. The marketing levy - I can’t speak to the Halifax one, but certainly for Cape Breton it was controversial when it was being brought in. Looking back, it has been a magical success. Again, that was industry driven.
We would certainly consider - not consider but advance - the marketing levy being asked for by that region based on three things. First of all, there would be a required agreement with the municipality. Second, a majority of the accommodations participants would have to agree. Third, there would have to be some measure of public consultation around how you arrived at the levy proposals.
Again, there would be absolutely zero reason for the province to deny permission for a levy so long as those three conditions were satisfied.
MS. MACFARLANE: The last time I had asked the question during a session, one of the reasons we were delaying was because we were considering a provincial levy so that everyone would be on the same grade. My understanding from recently meeting some tourism industry businesses is that the provincial levy is now off the table. Can you confirm that?
MR. MACLELLAN: Yes, I can certainly confirm that. I was just asking Michael for verification. I have never heard the idea of a full-scale provincial levy. It may have been my predecessor or the previous government. I’m not sure, but I have never heard that idea being floated. I didn’t remember the specifics around the three criteria that have to be met, but I certainly I can say that I have never even had a single discussion about a provincial levy.
MS. MACFARLANE: I know that we have two of these three in order. Measure of the public interest - what would you expect from us?
MR. MACLELLAN: If I can confirm with the member, the agreement with the municipalities is in place and the majority of accommodations, so it’s the consultation piece?
MS. MACFARLANE: That’s what I understand, yes.
MR. MACLELLAN: Based on the history around this, it’s essentially, the mechanism for consultation that was used to get to this point where everyone is in agreement. Was it public meetings with the residents in general? Did accommodations providers have sessions along with the municipality? What was the public consultation platform that led to this collective decision to advance the idea of a levy? There were similar examples and applications for Halifax and for Cape Breton.
MS. MACFARLANE: Okay. All right.
MR. MACLELLAN: Sorry. If I can just add, we did write to DEANS with that position. If that’s the third and final piece, then we can follow up and try to figure out what would be required, what the practices are, and what was used by the other places that have the levy - Halifax and Cape Breton. Then we can go from there.
MS. MACFARLANE: Is there a current strategy that your department is working on for year-round tourism strategy? I understood that there was something that was in the works. I’m just wondering where that is.
MR. MACLELLAN: To the member, it certainly is part of the conversation. It’s a significant part of Tourism Nova Scotia - Michele Saran, and Michael are part of Tourism Nova Scotia as well. What are the experiences that we can develop - whether it be in the peak season, the shoulder season, or the off season - that can drive visitors here in those times? For me, the easiest example is one that’s close to us, and that’s Celtic Colours. A staggering amount of traffic is generated through the Celtic Colours Music Festival in the shoulder season, October.
That has created the template for how we do things to pull visitors in when it’s not the peak season. Quite frankly, I think it’s fair to say we’re almost at our capacity in terms of our peak season for tourism.
Again, to get to that $4 billion number - in addition to things like direct air access and identifying and solving any issues and any uncertainty we have around the shared economy and Airbnb - developing the off season and the shoulder season is critical. The development of those unique experiences is critical - Celtic Colours, snowmobiling, any active living, skiing, cross-country, snowshoeing, things like that that are famous winter activities to bring people to the province from outside. There’s also developing the infrastructure for the experiences and identifying not only how we would have those platforms but also how we market those platforms, in addition to working with accommodations providers and players in the tourism industry to stay open.
It’s easy to suggest that an accommodations operator stay open through February, for example. But if they don’t have the traffic and they don’t have the people, then they shouldn’t do that. If we want to encourage that and the development of the off seasons, we have to provide those experiences that bring people to the region, to the province, and to the specific areas in Nova Scotia.
That is part of an ongoing conversation. It’s an industry discussion that Michele and her team have with TIANS and with all the players in the tourism sector. There are also infrastructure pieces that we can invest in that create more opportunity for off-season and shoulder season tourism traffic.
MS. MACFARLANE: With regard to the EXCELLerator Program, what is the criteria? Can anyone just apply to be the business that’s on the cover? Do you guys actually go out and decide who you want? What’s the process?
MR. MACLELLAN: The EXCELLerator Program is focused on unique experiences and the development of those unique experiences. We always use the great example of Dining on the Ocean Floor.
Once Tourism Nova Scotia identifies what could be a unique experience, using the Dining on the Ocean Floor as the example, they look at the private sector to see who would be best suited to accommodate a service and an experience of that nature and to that extent. In this particular example, the Flying Apron made sense for a number of reasons. That’s how these things are developed. It sort of happens organically. What are the experiences, who can provide them, and who can support what that overall experience looks like?
There isn’t a financial investment. It becomes more about helping in terms of research and data, coaching, and any advice that Tourism Nova Scotia could give using private sector participants who are in that game and who can help by way of advice and support.
With respect to the cover, really, that is largely market driven. The experts at Tourism Nova Scotia look at what aspects of the experience development have been successful and identify, by way of market reaction and market interest - that would land a particular business or experience on the cover.
MS. MACFARLANE: I’m just going to follow up with one more question. As you know, Pictou depends greatly on the tourism industry. It is a small harbourfront town. Going along, we have the deCoste Centre on the waterfront, we have the Hector Quay on the waterfront, and we have our Fisheries Museum. We have four campgrounds with beaches, and we have our provincial park and the ferry. Then you go a little bit further, and we have Caribou Provincial Park and cottages all the way out that way. One of our greatest destinations that has just been growing in leaps and bounds is Pictou Lodge and Smith Rock Chalets.
We depend a lot on the tourism industry in Pictou West - greatly - as well as our rich fishing industry. On behalf of those whose livelihoods are dependent on the fishing industry as well as the tourism industry in particular, they are deeply concerned about the potential of an effluent pipe going into the Strait from Northern Pulp.
The request is that perhaps you could come and speak to those who are in the tourism industry who are fearful for their livelihood, speak to them and just give them a bit of a sense of how the tourism industry plans to support them if nobody wants to come to their establishment or go to the beaches and swim. Would you be willing to come and meet them?
MR. MACLELLAN: I would be, 100 per cent. That’s an easy one for me. Michele, you can take a breather here, this is not going to be anything to do with you.
I have become extremely interested in the whole conversation around Northern Pulp and Boat Harbour and what it has all meant, sort of in the rear-view mirror, of course. It is an atrocity that has to be cleaned up. We have experienced the Sydney Tar Ponds. We can attest first-hand to the damage - environmentally is one part but also psychologically. To have that close to where you live is a tough thing for residents, whether it be Pictou Landing or all surrounding people in the region.
We’re on that, and I’m going to wade into deep waters here. What I would love to have a conversation about, since this is the Business Estimates for you, honourable member, and your two colleagues for Pictou - for everybody but for you three in particular - is where we land in terms of the right decision in talking about the water effluent and the pipe that would lead into the Strait.
There’s a big economic reality here that has to be - I’m not making a pitch, but you have a number of jobs obviously connected to Northern Pulp and the sawmills. Then you have the realities of what this means for the environment. From the perspective of the Department of Natural Resources, it’s the sawmills and the millers. A big part of their supply is to Northern Pulp. I was really surprised by one of the things I have learned in the last couple of years. The trajectory of the market for what is produced at Northern Pulp is actually on the way up, so it’s a coveted product.
I guess what I’m trying to figure out - you’re supposed to be asking me questions, but I’m putting it on you here. How do we get to a place where we truly understand what the people of Pictou County really think government should do?
MS. MACFARLANE: We could be here all night discussing this. I think what we have to realize is that we speak about jobs on both sides. You are speaking to someone whose grandfather, father, cousins, and uncles work at the mill. It’s not about closing the mill. It’s about protecting the environment. It’s about protecting a $6 billion fishing industry in this country. Nova Scotia contributes almost $2 billion - $1.78 billion or whatever. It’s about protecting tourism jobs.
What I think right now is that no one’s job should be underestimated. I believe that the Minister of Fisheries and Aquaculture, the Minister of Business, and the Minister of Environment all have a responsibility to come and speak to the people in my area who are fearful, to the people who are thinking that divide and conquer is the answer. It’s not the answer. There are solutions.
It’s more in my opinion - we can go back and forth. Really, it’s a question for the tourism industry, those individuals whose livelihoods depend on it to have an idea. Come see our beautiful beaches. Come see what could be in jeopardy here. It’s more of a courtesy, more acknowledging the people who are trying to keep up the industry that you’re responsible for in this province, which is doing fabulous under your watch.
It’s great. We’re moving on up in the world with the marketing. Credit it to everyone. But there are a lot of scared people right now in Pictou West.
What I will remind people is that I’m very, very comfortable speaking about this because all of us just knocked on a bunch of doors. I knocked on 5,000 doors in May. I know what I heard. Get me a doctor. Please don’t put that pipe in the Strait. It’s a very big concern.
I just hope that you will acknowledge them and come and speak to them at your convenience - before July, I hope.
MR. MACLELLAN: Look, I’m genuinely interested in your perspective on it. I think that it’s not a conversation for business alone.
MS. MACFARLANE: No, it’s not.
MR. MACLELLAN: On the tourism piece, no question - I’ll be happy to do that, for sure.
I’m just trying to understand where we should all be here. That’s it. That’s why I want to sort of help bridge that gap for the cross-departmental realities and for the people that you represent and who are in your region. You’re right, and I have been to a few of the places you mentioned, Pictou Lodge and others. It’s a remarkable place - a remarkable area not just that place in particular. That’s spectacular too. I hear you loud and clear. I just wanted to get your sense.
MS. MACFARLANE: Thank you.
MR. MACLELLAN: You’re welcome. Can I ask you a few more questions?
MS. MACFARLANE: Absolutely, I love answering questions. (Laughter.)
MR. CHAIRMAN: Order, please. I will now recognize Ms. Paon to carry on.
MS. ALANA PAON: Thank you, Mr. Chairman. I’ll continue on with Tourism while we tidy up the table if you don’t mind - just a couple more questions.
With this idea of trying to extend our tourist season to the shoulder seasons - I agree that Celtic Colours, being in my neck of the woods, Cape Breton Island, is a wonderful festival that has grown by leaps and bounds and continues to do so.
I have been really interested in the fact that Tourism Nova Scotia seems to have stopped marketing within the region. It’s more of a regional responsibility it seems, when it comes to marketing local tourism.
What I would like to know is, you have places such as the Fleur-de-Lis Trail and the Marconi Trail. I think they’re still in the Doers & Dreamers Guide, in fact. I haven’t flipped it open this year. All these trails are still listed in the Doers & Dreamers Guide, yet we have such a disparity on Cape Breton Island as far as what trail systems are still effectively tourism destinations, or at least lead to tourism destinations. I’m going to use the Fleur-de-Lis Trail as my primary example simply because I’m so familiar with driving down that road - more than I think I have ever done in my life - with all the potholes and lack of infrastructure. It’s putting them at such a huge disadvantage, and you get to this gorgeous little village at the end of the Fleur-de-Lis Trail called Fourchu. It’s like an outport village in Newfoundland and truly is right now with the lack of land lines and cellphone service.
What I’m getting at is, beyond looking at these high-end destination points that we seem to be marketing, beyond going for this experiential tourism experience such as Dining on the Ocean Floor, how do you bring in these other areas? It was a great idea at one time to utilize these trail systems. How do you bring those communities and those trail systems back up to par with everything else that’s going on on Cape Breton Island? They seem to have been lost in the shuffle.
MR. MACLELLAN: With respect to the first part of your question - I’ll get to the Fleur-de-Lis Trail piece, something that I’m quite familiar with - on the marketing side, Tourism Nova Scotia doesn’t have the budget. It’s an expensive endeavour to try to market regions. What they focus on is marketing experiences. Quite frankly, from their leadership, I think they have done extremely well. It’s not a regional breakdown in terms of what they’re marketing and who they focus on.
Basically, it becomes about bringing people to Nova Scotia by way of these unique experiences, staggering scenery, opportunities for ocean activities, beaches, and all those things. You can go down the whole list of attractions and great things we have in the province. At the end of the day, they do a national program of buying advertising and marketing social media that highlights our experiences.
Once they come, then we have to work internally by region to promote different things. Obviously, the private sector does a lot of that heavy lifting, but there are various associations - I think of Destination Cape Breton - that do tremendous work. I know that Halifax has a similar entity, as well. That is done once we get people into the province. Once we bring people in, then the regions identify and tailor their marketing to match experiences with demographics and psychographics of the traveller.
With respect to the Fleur-de-Lis Trail, it’s in a tough place with respect to what the mandate is of that particular highway. The lens through which that Fleur-de-Lis Trail is considered is really just transportation.
I know what it means to the member and certainly to the region, Richmond and Isle Madame, L’Ardoise through Fourchu, all though that area. The coastline up to the Fortress of Louisbourg is a significant historical piece not only of Cape Breton and Nova Scotia but the national identity. It is significant that way
However, I think from a tourism perspective, it hasn’t been highlighted in terms of the tourism experiences that are found along that route. I’m sure the member has heard the conversation - although it wouldn’t be her riding specifically; I’m assuming it would be the member for Sydney River-Mira-Louisbourg - about the connection between the end of the Fleur-de-Lis and Louisbourg, so there is a significant gap there. We have received correspondence here and there over the last couple of years saying that that should be connected. Why isn’t it connected? What about the rest of the highway and doing some of the work there? Again, quite frankly, the Fleur-de-Lis Trail is considered entirely on its transportation role and with a transportation focus.
We use the metrics of volume and previous years’ investment, just like every other rating for roads. We know in the Department of Transportation and Infrastructure Renewal - this has crossed all three Parties during their time in government - there is a lot of politics that has been reduced or eliminated from the Transportation and Infrastructure Renewal Department. The capital plan for roads and bridges is based on need and on the assessment that the engineers do in the field. The Fleur-de-Lis Trail receives support and funding and upgrades based on volume. That’s never great news when you are in a remote area because volume drives that investment a lot of the time.
It becomes the chicken and the egg. Many conversations I have had about the Fleur-de-Lis, about gravel roads that people would like to see paved are, you don’t have the volumes to make that significant upgrade or investment. The counter-argument is, if you made the investment, we would have more drivers on the road. That’s not an illogical position to take. Again, just for scenery and the experience alone, Fleur-de-Lis is magnificent, but the history is really what makes it.
From Tourism Nova Scotia’s perspective, they do tremendous work bringing people into the province, but then it becomes about paring it down into the regions to try to get visitors to specific places like Fourchu and Louisbourg. We do our best to make that work.
MS. PAON: I know that it is the chicken and the egg, a kind of circular argument when you’re talking about places like the Fleur-de-Lis Trail. It’s riddled with potholes. It’s difficult enough just to get regular residents back and forth safely, let alone $100,000 rigs going down there with large campers and so forth.
One of the issues that I do see that’s a huge impediment is definitely that the road stops. There’s no connection there. If there was a connection, and you could actually get yourself to Louisbourg, it would be a huge draw. I’m not familiar with the costs. I do know that the Friends of Gabarus have organized themselves to lobby government to try and see if we can do something to open up the roadway to continue on to Louisbourg.
There are beautiful beaches on that coastline. There is a bevvy of ATV trails all throughout those woods. There’s a beautiful destination point at the end called Fourchu. I’m not sure if anybody has been there lately but it’s magnificent when you get there. Hopefully we’ll fix the lack of land lines and the lack of cellphone coverage soon. It’s so picturesque. It’s like going to a little outport village in Newfoundland. A lot of people would want to go there. In fact, if you look at a lot of places in Nova Scotia 20 or 30 years back, they wouldn’t have been that much different than Fourchu starting off as far as the tourism plan, but we have fallen behind.
If you’re looking at extending the tourism season, if tourism is up in Cape Breton Island, and we’re so proud of the numbers that are coming out of Cape Breton, how on earth do we get a whole shoreline that has been forgotten back on the map? You show it as a tourism destination still through the Fleur-de-Lis, but how on earth do you get Fourchu back on the map after it has fallen so far behind? I don’t think it’s fair to leave it where it is.
You have another coast in Cape Breton. It’s a lost opportunity if we don’t at least start making inroads - excuse the pun - in investment to try to make certain that all of Cape Breton Island is fairly and equally treated when it comes to tourism investment and tourism infrastructure. How do you even start with a 40-year-old or 50-year-old plan that now has fallen to the wayside? How do you get them back on? Let’s get Fourchu back on the map.
MR. MACLELLAN: Michele just gave me a little bit of advice on this one, but I certainly was thinking along the same lines. At the end of the day, this becomes about experiences and the development of experiences. Again, that’s really what Michele and Michael and her team have focused on, and it has certainly paid dividends. They don’t have that regional focus on the marketing side per se, but there are experience development experts, people who know what they’re doing, who could identify those things for areas like Fourchu and along the Fleur-de-Lis.
I know the member wasn’t suggesting that there was a focus on the other coast and not particularly this one. I’m just sort of thinking as I speak here. Anecdotally, a lot of what’s along the coastlines in Cape Breton and most of Nova Scotia that I can think of has been private-sector led.
I could list the top 50 beaches in Nova Scotia, and there’s so much draw around all of them. But look at Inverness beach, which was probably one that was certainly known, but with some of the developments around Inverness now, that beach is packed all the time. At Ingonish beach and Black Brook, it’s the same thing, and Kennington Cove, not far from Louisbourg.
Obviously, when there are tourism attractions, and there’s a big season like there was last year because of a number of factors - a lot of the work that Tourism Nova Scotia - them not me - executed caused an increase in traffic. The parks being free, the Parks Canada initiative, was huge. You had an influx of people to Kennington Cove, which is a remarkable beach just outside the fortress.
I think that there is some support that the government can provide through Tourism and through some of this infrastructure development, whether it be the roads or other aspects of the Fleur-de-Lis Trail. At the end of the day, a lot of what exists now and what has existed really became about an idea that was private sector money and private sector risk.
You named something that I think is a tremendous opportunity, and I have never vetted this through Michele. I just believe on my own that we have a tremendous off-season opportunity in snowmobiling. I know that one area that has done it extremely well has been Margaree. It used to be these sort of unregulated, uncontrolled, unmaintained pathways and trails. Now all of sudden, you’re seeing cabins pop up. You’re seeing private sector operators giving the ability for snowmobilers to reach their operations for fuel, for food, and for things like that. I think these things happen as a result of the private sector identifying an opportunity.
I know that there certainly is some support on the infrastructure side for the road for the Fleur-de-Lis. I just can’t imagine that, with the right investment in terms of cabins - I don’t know what’s up there now in Fourchu but it’s a remarkable place to see.
We have to give people a reason to see those places. People aren’t just going to drive to see certain remote areas. They want to have accommodations. They want to have experiences when they’re there. As much as we would love a lot of people to see Fourchu, we don’t want them driving through. We want them to come and stay and spend.
Is there a high-yield traveller that we could attract to Fourchu? That would be a question for the experience development folks of Tourism Nova Scotia. They could at least participate in discussions around that. Michele said that Destination Cape Breton is working on some of those things as well. I think that you have probably had interactions with Mary and her team at DCBA. That’s something they’re interested in.
It’s amazing when you speak with professionals who are in the tourism sector, whether they be government, arm’s length, private investors, or stakeholders. They get way ahead of the curve. They have been talking about off-season and shoulder-season development of markets and experiences for years, when the rest of the public, including government sometimes, are just catching up.
It’s something that’s certainly on their radar, and whatever strategic investment and marketing support they can provide, they will do. It’s an opportunity, and I think that Fourchu and the Fleur-de-Lis can be part of that.
MS. PAON: I think that a place like Fourchu is a perfect spot to take advantage of this shared economy idea. There’s a lot of homes that could be utilized for Airbnb and so forth. There’s a lot of accommodations there that are available that could be utilized. The infrastructure is really already there. You just need that experiential component, I think, to get you there and a connector piece as well.
With that said and on the shoulder season, in Cape Breton-Richmond, I went on a humdinger of a drive last year about this time. It was freezing cold, -17. I had my gear on, and we had gone through the back trails ATVing. It was on a 4X4. It was fabulous. I haven’t had so much fun in quite some time, actually. It was a roaring good time.
I was absolutely taken aback. There were hundreds of vehicles in the woods in this backtrail system, this labyrinth of little cottages that people have, wood stoves on, burgers being readied for us, and other things that I can’t really mention here as far as drinks. I was thinking to myself, what an incredible opportunity, truly, for tourism in the shoulder season. We’re getting to a place where I think our environment is changing quite dramatically, and we are not always blessed with snow, even on Cape Breton Island, but all-terrain vehicles can get anywhere at any time.
I have been in discussions in my neck of the woods regarding this idea of an interconnecting trail system. I know that they do it really well up in northern Cape Breton. We are having a couple of hiccups down in Cape Breton-Richmond as far as some connector pieces. We have to go next to 100-Series Highways and so forth. We are getting caught up in these small, two-kilometre sections that we can’t get past. We can’t get into St. Peter’s, for example. From St. Peter’s, how do you get to L’Ardoise? From L’Ardoise, how do you get to Grand River and up to Fourchu? Then you could make your way all the way up to northern Cape Breton. Talk about an extraordinary opportunity.
What is the plan moving forward for looking at all-terrain vehicles, ATVing in the backwoods and coming into towns and utilizing accommodations as part of that? Where is the province moving with that? Is there a strategy in place to take a look at that? How can we get on board? I see it as a linear trail system, never mind a park. You have a large tract of land. You have a linear trail system that could all the way across Cape Breton Island and all the way across Nova Scotia.
MR. MACLELLAN: A couple of things - with respect to Tourism Nova Scotia, trails are one of those categories of our marketing and tourism complement that would fall under a regional focus and jurisdiction. What happens in Cape Breton, DCBA, would be different than what happens in Pictou, metro, the South Shore, Yarmouth, Digby, et cetera.
From a tourism marketing perspective, I think we are back to the development of experiences. We have to build those things. We talked about how having the opportunity to access cottages in the middle of these trails in Richmond County would be remarkable. Once they’re established and they have that capacity, then you could enter the regional marketing realm and make sure that the word is out there. You find your target audience, your demographic, and you pursue them. Again, that is done at the regional level.
One of the things that we focused on was around what we could do on the ATV and snowmobile trails piece. That was a partnership with the Department of Transportation and Infrastructure Renewal through our previous mandate - I was there at that point - in discussions with the Department of Business and Tourism. Rails to Trails is one aspect of trail development that has been seen across many parts of Cape Breton.
The Cape Breton Isle Royale ATV Club do incredible work raising money and investing in their own trails. They came with the idea that there are certain pieces of infrastructure and certain aspects of policy that could really develop that sector, that recreation activity. If we were to support that aspect of active living and recreation, motorized recreational vehicles of that nature, then the market for accommodations for experiences could come after that.
The member for Clare-Digby just walked in. He has been a proponent of the conversations around ATV policy and ATV investment, snowmobiles, and all the motorized vehicles out there.
We have made commitments in certain regions thus far around overpasses for snowmobiles and quads to get over certain portions of roadway. We have also talked about the options for pilot projects for using the shoulder to connect trails. That’s the role of government, and they are the things that we have looked at and done. There have been commitments around the capital plan to do some of those things.
But look, I have to tell you, and the member can attest to this, those things are delicate conversations as well. It’s easy to think, through a tourism lens, that the development and promotion of these types of activities is a good thing. Most of us see safe operation as a great tool and great activity for people, but there are dangers inherent in some of those things. People get a little nervous, and citizens aren’t crazy about certain ideas that would involve motorized vehicles, snowmobiles, or four-wheelers close to the highway.
It is a delicate process. The consultation has to be spot on. Policy has to be well thought out. Couple that with some strategic investments around infrastructure pieces that are not cheap, connecting two arteries of a trail to make a much longer piece. Over time and through policy changes, I think that’s a good direction on policy. You get to a point where the marketing experiences and the tourism experiences go hand in hand. We can’t really target those until we have the infrastructure and the rules in place that make them viable.
MS. PAON: How do we move together as a province? I look at this from a non-partisan approach. How do we move together so that we can have the best possible strategy moving forward to make this a success story?
We have an opportunity here in tourism. New Brunswick does snowmobiling so well. They have really cornered the market. They have really captured winter and winter fun through snowmobiling. I have gone snowmobiling across New Brunswick. It’s amazing, the infrastructure they have in place. Snowmobiling is one option for us, but again, climate change is making everybody a little bit warmer. We haven’t seen too much snow this year.
For the most part, the people I meet who are all-terrain vehicle owners are very responsible. They’re very respectful. It just takes a couple, obviously, of unfortunate incidents to have the general public really turned off, but that could be with anything. We could say that about anything.
What can we do as a province and as MLAs to try to come together to put a strategy forward? What do we need in policy change? What do we need to see so that we have safe motor vehicle use on the side of the highways? How do we get those overpasses in place?
I know the Department of Natural Resources - the old rail systems is an option as well. Coming into St. Peter’s, we’re having an issue because we have people who are using it as a walking trail and others who want to use it as an all-terrain vehicle trail. It’s waterfrontage. Waterfrontage doesn’t come every single day. It’s a beautiful place to go walking. It’s a beautiful place to come into the town with your all-terrain vehicle. If there could be another option, I’m sure those ATVers would probably look at that as well.
It’s hard to know who to go to first. I would like to see this as a provincial strategy of some sort. I don’t know what that looks like. How can we contribute to that to make it successful?
MR. MACLELLAN: That’s a very good question. I think that the way we do that - the Cape Breton ATV clubs, for me - and I know that our honourable colleague for Clare-Digby feels the same way about the quad ATV snowmobiling groups down his way. We talk about the private sector, with respect to the economy, and we talk about the regional focus. Tourism Nova Scotia markets experiences, but the regional focus is what matters in each particular area. This is no different.
The infrastructure that we have committed to in Cape Breton and outside of Baddeck connects two incredibly long stretches of trail. The Cape Breton ATV clubs came over a number of months - in fact, better than a year - encouraging, lobbying, pushing for that. Here is what this means. Here is the number of increased ridership over the last five years. Here is what we do on a safety and registration and regulation front. These are all the things that should matter to you in terms of increased tourism. One of the aspects was, if you build this overpass at the highway, you will see a spike in room rentals through the winter months at the Inverary.
Those things were brought organically by these groups, and then it becomes incumbent on government and MLAs to move that forward. I agree with you in theory about a provincial strategy, but based on my experience, what Digby and Clare need versus what Cape Breton needs is very different. You have to build up the individual core competencies, using the Baddeck overpass to connect those trails, using a pilot program by way of policy to get access for ATVs from one trail to the other and to get into town for fuel and things like that. I think those things have to happen somewhat independent - I don’t want to say in isolation - of each other. As these things build, I think then there’s the opportunity for provincial policy and provincial rules.
For example, if we were to do a pilot project, and it was successful, depending on how we measure that - obviously safety being the big piece of it - then we could sort of venture out. This worked in one area, so why can’t we do it everywhere else? Again, you build up that way.
Just from my own experience in Glace Bay and surrounding area, the increased ATV usage in the last decade is staggering. There’s a number of businesses that are propped up - not only the sales but just the servicing and accessories and things like that.
It became that motivating factor for the Cape Breton ATV clubs to then raise money to build infrastructure and to lobby Natural Resources. They were at risk of losing a 16-kilometre stretch of their trail that was owned by the federal government, formerly DEVCO, now Public Works and Government Services Canada. They just wanted to divest it. By way of pulling the Department of Natural Resources into the discussion, there was no risk for DNR to take it over, but there was a bit of a land swap. The federal government owned some land, and we basically did a trade-off so that everyone kept land asset values, and they got their trail. That’s exactly what happened. The thousands of men and women who use quads and snowmobiles every year are enjoying a great trail that’s in incredible shape.
To your point, I’m glad you said it, and I’ll support you on this one. It’s amazing that 99 per cent of riders follow the rules and use common sense. It’s idiots who make really bad decisions who devalue the activity of ATVs and snowmobiles. The lion’s share of people I know have never done anything that would jeopardize their own safety or put other people at risk, but you get the odd person who does it. That’s what makes the news, and that’s what becomes the story. That makes the balance all that more delicate.
MS. PAON: I would say that the lion’s share of the hundreds of all-terrain vehicle users in my area are seniors. It’s an alternative outdoor activity that seniors can participate in as well, which is amazing - and families as a whole. You see kids, young adults, and seniors out. It’s an all-ages activity, which is really amazing to see, and that opens up a world of opportunity right there.
You’re talking about pilot projects. There are so many pilot projects that I could pitch for Cape Breton-Richmond. We can’t get all-terrain vehicles from Port Hawkesbury to Evanston, or from Evanston down to Isle Madame. You have to go over a bridge. You have to go across a highway in Port Hawkesbury. You have to go across a highway again to get into St. Peter’s. Then you can continue on down to L’Ardoise and Fourchu and those areas. I just think that there’s a huge opportunity here for that section of Cape Breton Island.
The all-terrain vehicle users are already there. The rallies bring in hundreds and hundreds of people. It’s just amazing. I have never seen those kinds of numbers really, in other activities that we do tourism-wise. Again, it’s in the middle of winter, -17 or -15 weather - and they’re still out having a great time. They’re purchasing services. Some of them are staying overnight, so they’re looking for accommodations in that area, if there were accommodations available, obviously.
I would love to do a pilot project in Cape Breton-Richmond on this, but we would need to actually pitch it. There are four groups working with this right now that I have met with on a couple of different occasions. They’re working co-operatively, and they’re trying really hard to move this project forward. But they’re coming against barriers - DNR, as far as using the rail bed; what we do to get across that highway; and how we get across Lennox Passage Bridge.
What’s the first step in putting together a plan for what I am again going to call a linear trail system, to move this forward? We’re talking DNR, we’re talking Business, and we’re talking Transportation and Infrastructure Renewal. There’s a lot of moving parts in something like this.
MR. CHAIRMAN: Order, please. Time has expired. I’m sure the minister will be more than happy to answer that question tomorrow.
Would you would like a break, minister? Okay, one and a half minutes.
We’ll take a short recess.
[8:21 p.m. The committee recessed.]
[8:23 p.m. The committee reconvened.]
MR. CHAIRMAN: Order, please. We’ll get back to Estimates.
Ms. Chender, we’ll go to you and the NDP caucus with 39 minutes left in our day. The floor is yours.
MS. CLAUDIA CHENDER: I recognize that Minister Furey is coordinating the rollout of the cannabis file. However, I do have some Business-related questions on that front. The first is just about costs.
We saw $20 million, and we can argue whether that’s profit or revenue, but without any costs booked against it, it sure looks like profit. I wonder if you could give us any numbers around costs associated with the rollout through the NSLC.
MR. MACLELLAN: I don’t have any information pertaining to that. I would be happy to try to answer any questions around the cannabis rollout and how it’s going to work here in the province. Anecdotally, there have been private sector conversations certainly, but outside of that my only touchpoint would be one of my other portfolios, Service Nova Scotia. Even that would be around the regulatory side, but we don’t have any interaction or connection whatsoever with NSLC or any of the costs and revenue. NSLC obviously lives under the Department of Finance and Treasury Board, and if there’s anything around the business sort of scenario, I would certainly try to answer it.
MS. CHENDER: Okay, thanks. To the Business point, I’m wondering if the department has looked at or is developing a strategy to support local economic development opportunities that come with legalization. We know there’s cultivation and that we are going to have a supply shortage - I think that’s acknowledged. We will be going out looking for that. Are we stimulating our economy by supporting some people who might be able to fill that gap, in particular?
MR. MACLELLAN: Officially, we haven’t advanced anything in terms of a plan for private sector development in that sense. Obviously, what our cannabis legislation is going to look like and some of the details there will shape some of that.
I have absolutely no doubt that there will be a number of private sector opportunities related to cannabis. Where it goes in the future - the initial plan for the Province of Nova Scotia is to roll out through the NSLC platform, but outside of that, it certainly remains to be seen. From the conversations I have had around the aspects of having production facilities and the licensing around that - although that’s a federal jurisdiction, and they’ll decide on who gets the LP licences - there’s a number of aspects of indirect sales that are going to take place on the ground as it relates to cannabis consumption. The Department of Business will be active in that.
We haven’t been approached. There has been no private sector operator that has come forward to talk about incentive programs or anything specific we would provide by way of developing that particular sector. The general options that we have under the Department of Business would apply to any private sector entity.
At this point, it is very preliminary. There is going to be opportunity that I anticipate, not only on the recreation side. I am just following along. It has been fascinating, the developments that we have seen on the medical side with respect to CBD oil and the remarkable impact that’s having on people with medical conditions and for managing addictions.
We’re just getting into the world of cannabis and how it’s going to impact people from a medical perspective and of course the recreational piece. I know that there have been preliminary discussions with NSBI about some options for the cannabis industry but nothing formal, nothing official. I haven’t received anything. I just know that there’s a lot of private sector investors who would like to see, as this legislation comes out and as the legalization actually comes into effect, where the opportunities are going to be for private sales.
MS. CHENDER: Just to follow up on that, it’s obviously a tenuous analogy to all-terrain vehicles. Again when we’re talking about cultivation, I think there is the opportunity to use some of the underutilized existing infrastructure and locations in our rural communities. I am a little bit surprised to hear that we are not pursuing that. There is an acknowledged undersupply of the market, we have a great agricultural sector, and we have fallow facilities around our rural communities. I think it would be great to see some incentive and investment in that area.
Again, I recognize that this is more the jurisdiction of NSLC so you may not be able to speak to it, but under the kind of broad heading of rural economic development - we’re opening nine locations. There are lots of areas of the province that will have no access at all. Maybe they will have online access, if they can access the Internet - back to our previous conversation. I have a lot of questions about that, and I will certainly put them to the Minister of Justice, and if you have an answer, I will put them to you.
You know as well as or better than I and many other of my colleagues around this table who come from more rural jurisdictions that one, two, or three NSLC jobs in many of these communities is a big thing. It has an impact.
We look at New Brunswick, which is opening 20 locations. I am just wondering why the decision was made to leave these big blank spaces across the province where those jobs would make a difference, whether it be through private or public sector investment, in the case that the government has chosen. I just wonder if you could speak to that at all.
MR. MACLELLAN: Certainly, I will do my best to give you some kind of insight on my perspective, at least. I can tell you that I am in lockstep with the Minister of Justice and with the Premier. I like where we’re at. I like our position, at this point. I just think there are so many unknowns and so much uncertainty.
People who support the private sector movement for cannabis will point to Colorado. People who don’t like the idea and don’t want cannabis legalized will point to Colorado. You can shape it to be what you want it to be based on the jurisdictional experiences that other places have had.
I am in total favour of revisiting or having the discussion, if that’s the case, around what alternative models could be there. Moving it outside of the nine identified locations will be a conversation for a later time. I really believe that we have to be very, very careful here, not that there are any inherent dangers but just to see how the reaction is going to be.
I just think there are so many unanswered questions that only experience and time will answer, such as, are people going to grow their plants and consume their own? What is going to be the impact on the black markets?
It’s fascinating to see government conversations take place around what the ideal component and mix of the THC is, and what the proper pricing is going to be that’s going to subdue the black market - all the expectations that you have asked about. I’m pretty sure you have asked the Minister of Justice about these questions. He always comes back with the black market is going to be there, and it’s not going to be something that’s easily snuffed out. I think there are just a lot of things that are up in the air.
Based on some of the predictions, it could be a viable market opportunity for private sector development. I know that with the Innovation Rebate Program - the NSBI site identified cannabis as being one of those options under the agricultural piece (Interruption)
They’re not going to participate in the agriculture piece, the growing piece, for cannabis. I don’t know if that changes your perspective on government support, but that has been identified as not being an option for NSBI.
MS. CHENDER: Okay. I have a lot of questions about that. Once you have confirmed with your colleague, I would invite you to expand on that.
MR. MACLELLAN: The clarification from Laurel Broten is that primary agriculture wouldn’t be included. But there is nothing definitive on the value-add, which would obviously be down the road if you are talking about vitamins, edibles, or other aspects of it. Out of the gate, the primary agriculture for cannabis would not be.
MS. CHENDER: Is that consistent with an overall approach on primary production, or is that just for cannabis? Would an incentive be available to other agricultural industries?
MR. MACLELLAN: No, it wouldn’t be. It is consistent. All primary agriculture would be out, including cannabis.
MS. CHENDER: To start with, I would hope that, as you say, with a cautious approach in starting, that’s something that might also be reviewed. I would say that agriculture is something that we take a lot of pride in. We have a lot of rich agricultural knowledge and history in this province. We have challenges with income generation, and this seems like a good opportunity.
To the value-add, one of the conversations that has happened is around micro-processors or micro-cultivators starting to look at niches of the cannabis market, much like how our craft beer and wine industries have grown up. Is there discussion about a role for that or support for those kinds of businesses at all?
MR. MACLELLAN: With respect to cannabis?
MS. CHENDER: Yes.
MR. MACLELLAN: No, not from my perspective. There hasn’t been to this point.
MS. CHENDER: Then I’ll go back to edibles, which was your example. Is there any strategy? I think you put it under the broad heading of value-add. Specifically edibles are coming within another 12 months or so. Is there active conversation or strategy around supporting economic development opportunities? It seems like there might be an opportunity for them under NSBI. What opportunity might that be? What would that look like?
MR. MACLELLAN: We don’t have the specifics of that at this point. We talked about the fluid nature of the cannabis conversation in Nova Scotia and in the entire federation, and it really remains to be seen around some of those things. Once we get into the time frame, and the legalization is official, I think a lot of these things will materialize.
As you said, it’s 12 months after the legal date that the edibles come on stream and are legal as well. There will be a lot of ramp up. The fact is that the general legalization of cannabis will be in the ether, and people will be experiencing it in many forms and participating in that online and by way of the nine locations. I think that those conversations and the strategy behind that will really develop over that period.
MS. CHENDER: I’m wondering if there’s any conversation happening in tourism around cannabis. We have a lot of southern neighbours who live in jurisdictions where cannabis is not legal. We know they are those high-yield visitors that we’re looking for who stay in hotels, take ferries, and do all the things we want them to do. Is there any conversation around cannabis as a piece of the tourism strategy?
MR. MACLELLAN: I didn’t think so, but I just wanted to verify. No, there hasn’t been. Obviously, there’s a number of complexities around the legalization, and we really haven’t taken a deep dive into how that may impact the tourism complement, whether it be positive or negative. We haven’t ventured into that conversation at this point.
MS. CHENDER: Turning a little bit more specifically to rural economic development, with the elimination of ERDT, we have to sort of ask more specific questions in this area.
The first question is, how much of the budget of the department as a whole is going specifically into developing and supporting economic development in rural communities, outside the urban centre? Is that a number you can give me?
MR. MACLELLAN: I don’t think we could identify specifically, as an overall department, what aspects went to rural Nova Scotia versus what didn’t. When you look at any department or the Crown Corporations like Tourism Nova Scotia, NSBI, and Innovacorp through the innovation ecosystem and the work it’s doing in various hubs, including Sydney - and of course the conversation that was a big part of our estimates tonight, the broadband piece - significant allocations of each budget of the aforementioned categories would go to rural Nova Scotia. I don’t have a specific number, but it’s obviously part of the overall investment strategy that we have.
There’s just a couple of things to add a few different aspects of the rural support. Obviously, the Department of Business, in consultation with the Crown Corporations, does have a vested interest, and a lot of our attention is focused around the rural economies. Laurel just brought a stat, a 25 per cent increase in rural investment of FDI, foreign direct investment, in rural Nova Scotia.
Obviously, DNR has an extremely rural lens. Fisheries and Aquaculture and Agriculture do, of course, and many of the export sectors. Having the opportunity to be part of the trade file for the Province of Nova Scotia is staggering, first of all, the performance of our exports, and that’s to the entire credit of the private sector. The departments play a supporting role. What the private sector has done - the operators at levels of fisheries and what has been done there on our exports, and the tremendous work and investment in Michelin and what they have done and the tires - really supports multiple rural communities.
The export tie-in is significant for rural communities. I would say that all told, there is an extremely high level of focus around rural Nova Scotia when it comes to the Department of Business. We try to be leaders in terms of supporting economic development in rural Nova Scotia.
Just a few more components of the rural input and support from the Department of Business - NSBI has a person who is really leading the regional investment attraction program. Clearly that would be geared to rural Nova Scotia.
The regional teams that operate in rural Nova Scotia for export initiatives, export development, really are the front door to get access to many of those programs. Of course, Innovacorp operates many important things - the Spark competition, the innovation hubs, and the innovation focus down in Sydney that covers Cape Breton and eastern Nova Scotia. All of those initiatives really have a rural presence. They play a role in developing entrepreneurs and business platforms in rural Nova Scotia.
MS. CHENDER: Our caucus has been approached by a few people who have asked about the idea of import replacement. There is a group called the Centre for Local Prosperity, which recently published a report talking about first steps for import replacement basically as a way to increase local economies. Their report estimates that $4 out of every $10 spent in Atlantic Canada leave our economy and that a 10 per cent shift in demand from imported to local goods - and this is essentially an expansion of the buy local movement - could create 43,000 new jobs in the region and generate $2.6 billion in wages and $219 million in new tax revenue. Of course those numbers caught our attention.
I’m wondering whether any of the multiple pieces of your purview are looking at the economic potential of reducing imports, whether it’s just buy local or whether it’s something more specific like this particular import replacement strategy. My understanding is that a lot of that strategy is just around regulatory changes, targeting of funds. It’s not rocket science particularly. There may be reasons not to do it. I’m wondering whether anyone has studied that in your department.
MR. MACLELLAN: I think everyone would be a supporter and a believer. We work in the spirit of buying local, and that’s something that has spanned many governments and different political Parties, the importance of buying local. When you look at all the agriculture, the aquaculture, and the fisheries products that are caught and consumed here, that has always been part of a government narrative.
I think back to an organization we have, Taste of Nova Scotia, which does a tremendous display here once a year for MLAs to showcase all that Nova Scotia has to offer. That’s an example of how government can provide funding and then just get out of their way and let them do their thing. The way that they market themselves, their members, and Nova Scotia food, wine, and beverages is remarkable. The focus on restaurants and the uniqueness of each region and what that sector has to offer is outstanding.
I think it is always incumbent on government to try to figure that out. I would certainly be curious to see some of the statistics you mentioned about revenue and job creation. I would love to try to understand how exactly that works.
Not to use a conservative mantra, but it seems to be with some imports, the reality is that it becomes about market supply and demand and what people want to pay. People would love to see more independent private shops in their areas, but they are always still going to go to Walmart. It’s the reality of where we are. Again, back to my trade portfolio, I think about the realities of NAFTA and free trade with the U.S. and Mexico and what comes into Canada by way of products and services that are cheaper to buy in that method than produce them ourselves.
There are some entities in Ontario that are growing organic fruit and vegetables inside of pop-up tents. It’s a great way to do it if you have the means to do it, but it is an expensive endeavour, for sure. Obviously, this isn’t mass production in any sense. Rather than bring in bananas that are two weeks in transit, paying a certain price, and you have a few days of shelf life, this method that is done in Ontario is a great idea in theory. There are pockets of greenhouses and hothouses up north that do the same thing.
Anytime government can support anything that’s self-sustainable and self-sufficient inside the province, we would do it. Again, a lot of the time it just becomes about market factors. People want to pay less and have better quality. If we can make something cheaper and better, then certainly there would be a market for it, but sometimes that can be challenging.
I would love to see any of that data and information you have about that idea and the fact that we could replace some of what we bring in by producing locally.
MS. CHENDER: With respect, minister, the Walmart point is well taken. I think it is a similar to the conversation that we were having with Airbnb.
You brought up the example of Taste of Nova Scotia. I happen to know that a lot of the craft brewers have felt like they have been banging their heads against a wall for a long, long time to be able to get their product to market on an equal footing with some of those products that we import. There seems to be progress being made on that file, but it’s not just the invisible market working its own way. We know that government has a hand in regulation around all these things.
Similarly, with our agricultural sector, forget growing in greenhouses. Even in season, in Nova Scotia it’s often easier to get an apple from California than it is to get an apple from Nova Scotia. I think that’s less about actual cost and more about how people can get their product to market and how they can produce it. I think government can have a hand in that. I will certainly provide the report, and if we have a chance to follow up and have more conversation, that would be great.
Again, we are talking about supply and demand here. We do know that, as our caucuses want to discuss, we have a lot of people who have a hard time making ends meet in Nova Scotia. We know that the outcome of that in the consumer context is weak consumer spending. I am wondering if the department or any aspects of the Department of Business have specific programs or policies to stimulate consumer spending in Nova Scotia. Is there anything you can say about those?
MR. MACLELLAN: The short answer is there is nothing officially, from a consumer spending and consumer stimulation perspective, that we would have in the Department of Business.
This isn’t a kind of cop-out to not give you an answer - this is legitimately how I feel about these things, and this isn’t a partisan thing either. I think that the indirect actions of government increase and impact consumer spending. I think about a few things - job creation programs like Graduate to Opportunity. If we’re having any impact on, first of all, keeping our youth here, and second of all, helping them by way of student loans, by way of programming at NSCC and the universities, post-secondary training - if we’re having an impact on not only their access to it but their ability to pay for it, then I certainly think that has an impact on consumer spending.
Quite frankly, the things that are not sexy to voters and not sexy to the people of the province are things that we have been extremely good at. The fiscal management of the budget matters. I think of something that really affects people, and that is some of our decisions around taxes, like increasing the business threshold from $350,000 to $500,000. If you have a business, that impacts your ability to control or reduce prices for your goods. That’s going to increase consumer spending. When you remove taxes for 60,000 people, when you give tax breaks to half your population - 500,000 give or take - that impacts consumer spending.
I don’t know if everywhere else in the province is the same. I’m assuming that it is. I can tell you that in industrial Cape Breton, when it’s tax season, there’s a bump for a lot of businesses because people do more of those things that they want to do all year, but they just can’t afford it.
It doesn’t translate into political capital, quite frankly, to give tax cuts. But it matters to people, and they feel it, at least once a year or more often. The fact is that 60,000 Nova Scotians don’t pay provincial tax, and I think that consumer spending and your ability to fill the cupboards and add as much nutritional value as you can really makes a difference.
The only other thing - it’s never a hot topic to talk about the reduction of red tape. But again, we see the remarkable impact that those things have on businesses. It affects their bottom line. It affects their ability to control their costs, which may pass along a break and a reduction or at least stability on pricing to the final consumer.
Directly, there’s no focus on consumer spending per se. I think that indirectly, as a department and as a government, there are things that we do across a myriad of departments that really make a difference.
MS. CHENDER: On a constituency level, I hear about demand as an issue, especially from small businesses. Part of that is a price thing, like you say, and part of it is marketing and whatnot. Two things - one, do you hear about that, or do people in your Crown Corporations and whatnot? Just to confirm, is there any data being collected? You’re saying anecdotally that the tax breaks and the reduction of red tape and all of the wonderful things that you have done in your tenure are having an impact. Do we know that? Have we seen it? Can we measure it?
MR. MACLELLAN: We’re giving tax breaks to half the population, and zero provincial tax to 60,000 people. I don’t know what the mechanism would be to measure that directly, so I guess we wouldn’t have metrics on that other than to say that people are going to realize savings, and they’re going to spend it.
I don’t know if they are ever entirely measurable. I’m sure there are ways to dig down and figure out, through data mining, a way to quantify that. I think that everything that I have listed off certainly has an impact. I don’t know if we’re keeping specific measurements. If the red tape reduction strategy saves businesses $25 million, it’s hard to specify what is passed on to the end consumers or how it ultimately impacts individuals.
I think that we have to trust in the fact that that is good policy. We believe in tax cuts, and we believe in how that impacts people. We don’t have exact metrics on all the students who have been through the Graduate to Opportunity program - where they’re spending their money specifically, what they’re putting their disposable income toward, what their savings are, and what their debt looks like - but we certainly would be confident that is positively impacting people.
MS. CHENDER: Part of the background behind my question is that I think some of those tax breaks and Graduate to Opportunity and in other departments - we know a lot of people just can’t make ends meet. It might be that those things make them just not make ends meet slightly better or that they may be adding to their debt load or whatnot. We were kind of looking for provincial statistics on consumer spending, but it sounds like you don’t have that.
I asked questions about this at the beginning, and I know time will elapse shortly, but I have heard the minister say a lot that you believe that what you’re doing is the right thing. What I’m trying to get at is, how are you measuring it? How do you know?
MR. MACLELLAN: I don’t think I’m going to have an answer that’s going to give you those specifics. Again, everything that I have identified I think is part of a healthier economy. Whether that be red tape and tax reductions, investments in graduates, investments in having businesses keep more of their money, or the remarkable work in planning we have done around immigration, when they impact our bottom line, I think that helps people.
One of the things that you talk about is challenges and complexities. I’m now wading into the waters of an honourable colleague who’s at the end of the table here, the Minister of Community Services. In our previous mandate, we made the single largest investment in income assistance in a very long time, let’s just say, which amounted to $20 per month. Minister, does that sound accurate? (Interruption) It was the largest increase ever, the $20 a month. We have a long way to go and the complexities of supplying . . .
MR. CHAIRMAN: Order, please. Time for debate of Supply has ended for today. When we come back together, probably tomorrow, the NDP caucus will have 21 minutes remaining, Ms. Chender.
We stand adjourned. Thank you.
[The subcommittee adjourned at 9:03 p.m.]