Agreed.

---Agreed

Thank you. Does the committee agree that this department be deterred until the day is finished? Does this committee agree?

Agreed.

--- Agreed

Thank you. Does this committee wish to proceed with the Department of Economic Development and Tourism? Agreed?

Agreed.

--- Agreed.

Then I would like to thank the witnesses at this time. Mr. Minister, do you have opening remarks?

Department Of Economic Development And Tourism, Introductory Remarks

Thank you, Mr. Chairman. Mr. Chairman, Economic Development and Tourism is projecting

an increase of spending one per cent to $33.7 million in 1993-94. Most of the projected increase is attributable to forced growth resulting from increased maintenance related to tourism infrastructure and to costs associated with portfolio management at the Northwest Territories development corporation. The remaining increases can be attributed to wage and benefit adjustments.

Since the government's economic strategy was introduced in 1990, the department has concentrated on implementing business programs to stimulate growth making use of local labour, particularly in smaller centres. The department will continue to work with the private sector by investing in arts and craft, northern food production and tourism.

In the longer term, economic growth will depend on the larger sectors of the economy including government at all levels, mining and energy development to provide opportunities for northern private investment and allow for the maximum use of northern labour.

The Department of Economic Development and Tourism will work with aboriginal groups, industry and other government departments in realizing opportunities from industrial projects such as now energy and mineral developments, major public work projects and future housing development.

Stimulation Of Local Business

The department has several avenues to stimulate growth in business and employment. These include the business development fund, the economic development agreement, the Business Credit Corporation and the NWT Development Corporation.

Business Development Fund

The business development kind, created in 1991 to address deficiencies in previous business contribution policies, is the departments main tool to foster the development of small business and to create jobs in the Northwest Territories. The fund now addresses the complete life cycle of a business.

Funding is targeted to businesses in less advantages communities. During the 1991-92 fiscal year, 72 per cent of the BDF funding went to level II and level III communities.

Based on information contained in applications, for every dollar contributed to businesses by the business development fund an additional $1.77 in investment was generated from elsewhere, such as shareholder equity and other financing.

The business development fund venture capital component is designed to attract outside investors to specific projects. The attraction to investors is the 30 per cent refund of the investment, to a maximum of $150,000, once the projects have been fully subscribed.

Venture capital companies can only invest to 49 per card ownership keeping ownership in the hands of the principal investor. In 1991-93 VCP contributions levered $1 million for two projects values at $3.1 million.

In 1991-92, BDF dollars contributed to the creation of 173 person years of employment with earnings totalling $3.6 million and the retention of another 586 person years. Those years might have been lost had contributions not been made, with wages totalling $13.3 million. The average cost of each person year created or retained was $4669. Wages generated averaged $22,000 per person year.

The program is meetings its objectives with respect to encouraging investment in those communities where unemployment is highest.

Economic Development Agreement

Implementation of the EDA will continue this year. We are anticipating that total expenditures will be approximately $8.4 million dollars, cost shared between the GNWT, Indian Affairs and Northern Development, Industry Science Technology Canada and Forestry Canada.

Initiatives that are targeted for implementation this year include: the marketing, distribution and production of arts and crafts; activities to support performing artists; a number of initiatives to encourage communities to stimulate business activity through: the establishment of physical infrastructure; the delivery of business counselling services and skill upgrading; mineral exploration and development of technologies to improve mining and processing operations; assistance with renewable resources initiatives including: meat and fish process and marketing; development of a commercial wildlife harvesting industry; technology transfer and education in the forestry industry; and, assessing the viability of a commercial fish industry; also marketing and training in the tourism sector.

Business Credit Corporation

Mr. Chairman, the business credit corporation is mandated to stimulate economic development and employment opportunities by encouraging business growth. It was created to put the small business loan fund on a more business like footing and at arm's length from the government. Although the department is providing office space and support staff for the corporation, the board is now composed entirely of individuals from the private sector. The chairmanship has been passed from the deputy minister to an individual from the private sector.

The corporation currently has a total lending and liability limit of $20 million.

In the short-term, through changes and modifications in the internal processes, the corporation will seek to improve client services and turn-around time in processing loan applications.

To reduce paper burden, a single application form, with schedules, has been developed for clients, making it easier to apply for funding. In addition, regional staff are receiving a special training course with the intention of giving regions credit granting authority on loans up to $25,000.

Northwest Territories Development Corporation

The Northwest Territories development corporation operates at arm's length from the department and is mandated to invest primarily in and for the benefit of lesser developed communities, communities where jobs are needed the most. The corporation has investments in the production and sales of country foods, lumber and arts and crafts. The corporation has also invested heavily in commercial fisheries and operates retail stores. It is expected that the investment portfolio will increase by $6 million in the coming fiscal year.

The development corporation is founded on the principle that increased local ownership and participation will lead to increased local success. Local participation is encouraged. Since start-up, the corporation has invested $4.6 million as the minority partner in ten joint ventures, $1.4 million in pilot projects and a further $10.5 million in businesses that are majority-owned by the corporation. Last fiscal year and this year to date, $2 million in subsidies have been given to majority owned businesses. Subsidies represent $6,000 per employee.

Seventy five per cent, or 109 of the 146 development corporation employees are aboriginal. One hundred eight work in level II and III communities. If the definition of "employed" is extended to include fishermen, arts and crafts cottage workers and hunters, who are earning an income as a result of the corporation, the percentage of aboriginal workers increases to 91 per cent, 365 of 402 employees of whom 364 are in the smaller communities.

Program Delivery

Regional offices have been given authority for contributions for marketing, business expansion and management training up to $25,000. Priority for program delivery has been, and will continue to be, transferring greater authority to the regions.

The relationship between headquarters and the regions will change with most decisions respecting program delivery being made in the regions. Headquarters will remain involved in broad policy development and setting standards, systems and procedures to ensure accountability and sound decision making within policy across the territories.

Personnel in the department will work closely with federal government economic development staff to ensure that the best use is made of resources available to both levels of government. Staff will also work more closely with other departments to ensure that maximum benefits are derived from government expenditures. For example, there will be closer cooperation between parks and visitors' services and the museums programs to ensure that the best use is made of facilities constructed. The regional office in the Fort Smith region is working closely with the Science Institute on wood pelletizing. As well, other departments will be encouraged to purchase northern goods and services when they are available.

In order to do this we are assessing our organizational structure to ensure that the department is open and adaptable to change and to ensure that accountability to clients and the public is maintained.

The role of the EDO will change to better accommodate community aspirations with respect to economic development. The department is introducing a test program to delegate responsibility for the delivery of economic development services to the local level. This will allow communities to set priorities for, and to generally oversee the work of, the economic development officer.

We will also continue to place a high priority on recruiting and training qualified aboriginal candidates for departmental positions. Through our affirmative action business and economic development program, financial assistance is made available to affirmative action candidates eligible for training at post-secondary institutions or other training relevant to further career advancement. Overall emphasis will continue to be placed on hiring northern residents. Southern recruitment will be considered only if no qualified northern candidates are found.

Product Development

The Northwest Territories is a land of potential. The department, in concert with communities and the private sector, is investing time, skills and money into the development of the tourism, arts and crafts and natural resource sectors.

Tourism

The Conference Board of Canada, Mr. Chairman, has reported preliminary data for 1992 indicating that travel activity has been flat or has declined nationally. The picture in the Northwest Territories appears to be better. Pleasure travel seems to be recovering, particularly in the Baffin and Mackenzie Delta. In the Baffin, 50 package tours were sold in 1992, an increase of 25 per cent over the previous year generating an increase in revenue of 21.5 per cent. Based on counts of vehicular traffic at the Peel River ferry crossing, travel up the Dempster Highway increased by 25 per cent last summer. Vehicles crossing the Mackenzie River at Fort Providence decreased by 21 per cent however, and traffic at Fort Liard was unchanged from 1991. Although river crossings decreased at Fort Providence, use of the visitors' centre at the 60th parallel increased by 28 per cent. Based on operator reports, there was little change in activity in the Kitikmeot and Keewatin.

To draw tourists we need destinations, attractions, and people have to know about them.

Product development assistance will be directed to respond to emergent market requests, specifically from Japan, the United Kingdom and Germany. Package tour developments will continue to focus on the Nahanni Ram, the Northwest Passage, Dempster Highway destinations and the Baffin.

To ensure that people are aware of our tourism products, the department, in cooperation with the private sector, will create a strong image of the NWT through advertising, sales, promotion, merchandising, public and media relations and travel counselling.

The major tools to expose northern products to the world are the "Explorers Guide" and the cooperative marketing program.

Every licensed operator in the Northwest Territories is listed in the "Explorers Guide." In addition, operators have the opportunity to purchase advertising space in the publication. Distribution of the guide is expected to reach 130,000 in 1993.

The cooperative marketing program is a joint effort of the department and operators.

Advertisements were placed in 36 different magazines in promotion of six product segments: naturalist, road touring, river adventure, hunting, fishing and special interest. All product segments have been fully subscribed. The core costs for the ads were borne by the department with 44 licensed operators buy in.

There has been 13.5 per cent of the cost of producing the "Explorer's Guide" and placing the ads for the cooperative marketing program has been recovered from operators.

Parks

Parks are a key component, Mr. Chairman, or a tourism development strategy. Perhaps the most striking tourism statistic for the current year relates to the Katanallik Park reserve on Baffin Island. There are no services, facilities or staff in the proposed park thus there has been no promotion. People were still drawn to the area by word of mouth. There were 66 people from outside the Northwest Territories who spent, on average, ten days hiking in the park last year. Each hiker probably spent $1,000 to $3,000 for their trip. Two American tour companies will be advertising tours accommodating a maximum of 75 people for next year. This suggests great potential for the area and for Lake Harbour when the park is more developed.

Detailed design work on Meliadine River Park, Mount Pelly Park and Paniksak Park will be undertaken while initial conceptual design of Campbell Lake Park and Hidden Lake Park will commence. This work will contribute to the establishment of a more complete network of parks in the Northwest Territories to ensure further expansion of the tourism sector.

During 1993-94, we will be developing better information sources for visitors. The Dempster/Delta visitor centre in Dawson City is scheduled for completion and a parallel information strategy is being developed including roadside and community display signs along the route which provide information on site. Advanced interactive technology will also be tested as a means of providing information to visits.

South of the lake work continues on the Fort Smith Mission Historic Park. The department also has committed to a number of projects driven by local residents to improve tourism products in the region. Construction of an arts and crafts booth at the airport is under way as is the procurement of a product. Equipment and materials have been purchased for the Slave River look-out and information and interpretive signage will be developed and installed.

Commercial Renewable Resources

Mr. Chairman, the department will continue to actively engage in partnerships with the private sector and other government agencies to stimulate the commercial renewable resource economy in the Northwest Territories, to increase food production and food process, to create jobs, wealth and to reduce imports. Production and marketing research, product testing and continued examination and exploration of existing and new stocks will take place in order to expand commercial production and increase sales of renewable resource products.

A committee has been established in the Inuvik region to look at the establishment of a tannery. The department will work with the committee to develop a proposal for a small scale pilot project in the region.

The department will continue to pursue the development of commercial muskox and caribou harvests and will work with the Department of Renewable Resources to develop standards for NWT meat inspection. We will also do the background work needed to develop an industry support program to facilitate expansion of the livestock industry. This will be done in conjunction with the development of an abattoir south of Great Slave Lake.

The department will continue to work with egg producers to get a quota allocation from the Canadian Egg Marketing Agency.

During the last year, the department provided support to NWT operators wanting to gain entry into the Davis Strait and Baffin Strait fisheries. This resulted in the successful allocation of 5,500 tons of offshore species. The department will continue to assist northern operators to gain entry into the high competitive, but lucrative, offshore fishery.

The main thrust of the inland and inshore fisheries this year will be to identify opportunities for increased utilization of existing quotas through innovative harvesting practices and technology, and identification of now fish stocks. On the marketing side of the fishery, support will be given to the development corporation and the private sector in marketing Arctic char. The development corporation will be constructing a new fish plant in Rankin Inlet which will put it in a better position to process and purchase Keewatin fish. A program to process and task market 100,000 pounds of Great Slave Lake species in the north will be developed and undertaken next summer.

Arts And Craft Production

Mr. Chairman, with respect to arts and crafts, in 1992 the department concentrated on marketing in the far east and in Europe. With the results of the recession still in evidence, industry participants are looking to the department for ongoing assistance to develop new markets. The development and delivery of marketing support programs continues to be a priority.

On the international side, there are two geographic targets for 1993-94, the far east and the United States of America.

Through the masters of the Arctic exhibit sponsored by the Amway environmental foundation and various partners including the United Nations environmental program, the department will support the development of the United States market for Northwest Territories arts and crafts. In Japan the department and the private sector will be co-sponsoring exhibits at museums and retail outlets. Our support will be through the publication of promotional materials in Japanese.

For the domestic market, new emphasis will be placed on the development of niche markets for NWT craft products. In fiscal year 1992-93, through the BDF, the department provided support to the establishment of a now business specializing in mail order marketing. Sales have reached as high as $4,000 in a day. The use of mail order and other innovative marketing techniques will continue to be explored and supported by the department in its efforts to develop new market niches for NWT craft products in the domestic market.

Through the department's new performing arts booking agency, new opportunities will be identified that will result in increased expose and improved earnings for NWT's performing artists. The sponsoring of festivals will also provide commercial venues for performers as well as contributing to the overall tourism experience for visits to Canada's Northwest Territories.

Conclusion

In conclusion, Mr. Chairman, I would like to emphasize that program initiatives will centre on improving the delivery of existing programs. We want to increase efficiency and get more value, in terms of quantity and quality, from the dollars we spend.

Our specific areas of focus will be to reduce employment and income disparities between and within communities and regions; promote import substitution; promote growth and diversification; and, ensure that NWT residents receive a larger share of the benefits of economic development. I apologize for being so long-winded Mr. Chairman. Thank you very much.

Thank you, Mr. Minister. Does the Standing Committee on Finance have any comments? Mr. Dent.

Comments By Standing Committee On Finance

Thank you. Your motion is in order. To the motion.

Question.

Question has been called. All those in favour? All those opposed? The motion is carried.

--- Carried

Thank you. Does the Minister wish to bring in his witnesses?

Yes.

Is the committee agreed?

Agreed.

--- Agreed

Thank you. Please proceed, Mr. Minister. For the record, can you please introduce your witnesses?

Thank you, Mr. Chairman. Mr. Roland Bailey, deputy minister of Economic Development and Tourism, and Mr. Jim Kennedy, director of finance for the Department of Economic Development and Tourism. Thank you, Mr. Chairman.

Are there any general comments? Mr. Ningark.

General Comments

Mr. Minister.

Mr. Chairman, the Kitikmeot region is a priority with us. Mr. Bailey has visited there recently and he will be going back again. I think we are getting a handle on some of the problems that we have in this area. We will be trying to resolve them this year. As I have said, it is a priority with us, Mr. Chairman.

Thank you. Mr. Ningark.

For the record, I am not saying that the present Minister has been neglecting the region. It has been the previous Ministers. Thank you.

Are there any other general comments? Mr. Koe.