[Recorded by Electronic Apparatus]
Wednesday, April 16, 1997
.1535 
[English]
The Chairman (Mr. Andy Mitchell (Parry Sound - Muskoka, Lib.): May I ask everybody to take their seats, please. We'll come to order.
The committee is pleased today to have with us the minister, Anne McLellan - welcome, Madam Minister - as well as Jean McCloskey, the deputy minister, and Richard Fadden, the assistant deputy minister of the corporate services sector. I hope I have that right.
The committee will be reviewing the estimates today. I believe the minister has an opening statement she would like to make.
Madam Minister, please proceed.
Hon. Anne McLellan (Minister of Natural Resources): Thank you, Andy.
[Translation]
Mr. Chairman, members of the committee, thank you for the opportunity to meet with you.
[English]
Mr. Chair, you've already introduced my deputy minister, Jean McCloskey, and assistant deputy minister, Dick Fadden, responsible for corporate services. Let me just introduce a few other people to you, since this may be the last opportunity I have to do this. They're people who are very important to the running and operation of the Department of Natural Resources.
[Translation]
There is Dr Marc-Denis Everell, representing the Earth Sciences Sector...
[English]
Actually he's not here today, so Richard Howard is replacing him.
[Translation]
There is also Mike Cleland, representing the Energy Sector, Dr Yvan Hardy, from the Canadian Forest Service and Bill McCann, who represents the Minerals and Metals Sector.
[English]
I would like to begin by commending the standing committee for its work over the past few years. Your deliberations and analyses have helped move Canada forward on the difficult issue of sustainable resource development.
I would also like to say how much my department benefited from being a pilot project for the new report on plans and priorities. This new approach will improve the government's expenditures reporting to Parliament. I would welcome any comments that you might have on Natural Resources Canada's report.
I would also like to congratulate all of you. I've done so individually with some, but collectively I would like to congratulate and thank the committee for your report entitled Think Rural!, which was tabled last month. It goes without saying that this is an excellent piece of work. I have heard many, if you like, third-party endorsements of the quality of the work and the utility of the work.
Just this morning my office received a call from an organization, the Canadian Federation of Agriculture, asking us when as a government we were going to respond, because they thought the report was one of the best pieces of work they had seen in a very long time. I think that's only one example of a number we've received, which speaks to the fact that the work you did was not only worth while but was noticed by those who have interests in, live in, and work in rural Canada.
So I do genuinely want to thank all the members of the committee for that work. I think it's going to make a real difference as we grapple with the issues surrounding the rural economy and the future of rural Canada.
Now I would like to talk briefly today about how my department will build on its achievements in 1997-98.
NRCan, as you all know, has undergone a significant evolution over the past three years. Between 1995-96 and 1998-99 the department's budget will have been reduced by approximately 50%, from $907 million to $485 million. Our requirements for 1997-98 under the main estimates are $489.4 million. The department also will have downsized by about one-third, with a staff projection of about 3,600 for March 1998.
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[Translation]
We have refocused our activities on core federal responsibilities, and we are playing an increasingly active role at the international level. Most important, NRCAN has fundamentally reoriented its policies and programs to focus on sustainable development in the energy, forestry, and mining sectors.
[English]
Achieving this integration of economic, social, and environmental objectives is critical to the future of Canada's resource industries. As noted in your rural report, sustainable development is essential to ensure jobs and growth opportunities for future generations of rural, and indeed all, Canadians.
I am pleased that my department has played a central role in helping Canada's resource industries move towards sustainable development. For example, we have reoriented federal energy policy to support energy efficiency and the use of renewable energy sources.
NRCan programs, such as the federal buildings initiative and the industrial energy efficiency initiative, and our regulation of minimum energy efficiency standards have helped the public and private sectors increase the efficiency of their energy use.
Canada's renewable energy industry has significant potential to create jobs and economic growth, as well as provide solutions to many of our energy-related environmental challenges.
About six months ago, some of you may remember, I unveiled my department's renewable energy strategy. In addition, the 1997 budget announced a number of tax measures that will encourage investment in energy efficiency and renewable energy projects.
Renewable energy has made the jump from a dream to reality in a very short period of time. This fact was demonstrated at the impressive Renewable Energy Trade Show, which I attended here in Ottawa on Monday. A number of colleagues from all parties attended the two-day conference, and I want to thank them for doing so, because I think the renewable sector needs political support from all of us. I think they were therefore very pleased to see the degree of political support and interest they received from members of Parliament.
Energy efficiency and renewable energy are very important elements of Canada's climate change program. One of my department's key climate change initiatives is the voluntary challenge and registry program, which encourages companies and institutions to voluntarily reduce their greenhouse gas emissions, primarily through energy efficiency. The VCR will be strengthened and new climate change initiatives in the industrial, commercial, residential, transportation, and municipal sectors will be pursued.
Our commitment to energy efficiency in renewable energy is well known. At the same time, we cannot lose sight of the fact that Canada's economy will continue to rely on fossil fuels, a major Canadian industry that employs thousands of Canadians and contributes significantly to our balance of trade.
With this in mind, our government, in the 1996 budget, took important steps to ensure the environmentally responsible development of our frontier resources, particularly the oil-sands of western Canada. Clearly, the energy industry will continue to be a major engine of economic growth in Canada for many years to come. The Prime Minister acknowledged as much during his trip to Fort McMurray last summer.
My department has also taken steps to support the sustainable development of Canada's mineral resources. Just last month I tabled the government's response to the Standing Committee on Natural Resources' final report on streamlining environmental regulation for mining. This response confirms our intention to create a mining regulatory regime that promotes investment while achieving the highest level of environmental quality.
Let me just say that I think that report is another example of the very high-quality work your committee has done, and if any of you talked to industry, you will know they were very impressed with the report you prepared. They thought it struck the right balance between economic and environmental concerns.
Our government is committed to moving forward with the regulatory reform agenda. I think our response was a positive and fulsome one, and I again want to acknowledge the very good work this committee did in preparing the report and making the government ever more aware of the important concerns relating to regulatory reform and the mining industry in this country.
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[Translation]
In November, I released our government's new Minerals and Metals Policy. As a result of this policy, all federal mining initiatives now have three overriding goals: advancing sustainable development, building a more efficient federation, and creating a climate that will support job creation and economic growth.
We have also taken some steps on the fiscal side to support sustainable development in the mining industry. In addition to providing an up-front tax deduction for mine reclamation projects, we have made important changes to the flow-through share mechanism. The Accelerated Capital Cost Allowance has also been made available for major productivity or environmental modernization programs.
[English]
Moving to forestry, the model forests program is an integral part of our commitment to sustainable development and to maintaining the health of our forests. As well, the first nations forestry program has been established to boost local economic development, provide business expertise, and create long-term jobs in first nations communities. Helping first nations participate in the resource economy is one of NRCan's main policy goals for 1997-98.
My department has also promoted the development of Canadian criteria and indicators of sustainable forestry and is playing a lead role in formulating international criteria and indicators. With the support of the provinces we are pursuing an international forest convention to protect Canada's trade interests and help ensure that forests around the world, including our own, are managed sustainably.
In the earth sciences sector NRCan Is helping the Canadian geomatics industry market its leading-edge expertise internationally. Geomatics technologies can help Canada and other nations, particularly developing countries, address their sustainable development challenges.
Last September I signed the Intergovernmental Geoscience Accord with my provincial and territorial colleagues to pave the way for greater cooperation among government geological surveys in Canada. We are also continuing collaborative state-of-the-art geoscience programs, such as NATMAP and EXTECH, which are contributing to mineral exploration efforts across Canada.
Sustainable development includes a focus on health and safety. In this regard, we introduced the Nuclear Safety and Control Act, which has received royal assent. This represents the first modernization of nuclear energy regulation in 50 years. Again, I want to thank the committee for the fine work it did in working on that legislation and moving it expeditiously through the legislative process.
As well, last July I released our government's policy framework for radioactive waste. This framework establishes a comprehensive and integrated approach to the long-term management and disposal of radioactive wastes and clearly defines the roles of government and waste producers and owners.
These are some of the important steps that we have taken in my department since 1993, but more needs to be done. My department will soon publish a discussion paper to stimulate debate about NRCan's role in helping Canada's resource industries to practise sustainable development. The response to this paper will help my department develop its own sustainable development strategy, which will be tabled in December 1997.
In conclusion, let me underline the importance of our work and your work. More than500 communities and 1.5 million Canadians depend on the natural resource sectors for their economic well-being. Canada has a balance of trade in minerals, energy, and forests of close to$65 billion. As noted in a recent issue of l'Actualité, these industries continue to drive the nation's business. Canadians depend on them more than we usually realize.
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We will continue to strengthen existing programs and partnerships to create jobs, minimize the environmental impact of resource development, meet our climate change commitments, and protect the health and safety of Canadians. The department has dramatically refocused its services and programs and is now positioned to help Canada meet the challenge of sustainable development as we move into the next millennium.
[Translation]
Thank you again for the opportunity to meet with you. I have enjoyed working with your committee and I have valued your input on sustainable development issues. Thank you.
[English]
and thank you for working effectively, constructively, and vigorously with me and my department over the past three and a half years or so. Who knows what the future holds for any of us, but I do, with all sincerity, close by saying that I think all of us together have achieved a remarkable amount as it relates to the resource sectors in this country. We've established new partnerships, new friendships, and new connections that have increased our understanding. I simply want to thank you all for that.
The Chairman: Thank you very much.
I'd now like to call on Mr. Canuel for 10 minutes of questions.
[Translation]
Mr. René Canuel (Matapédia - Matane, B.Q.): Thank you, madam minister. She has heaped praise on us. Now I will feel rather uncomfortable making comments or asking her tough questions.
[English]
Ms McLellan: It never stopped you, monsieur.
[Translation]
Mr. René Canuel: Since we are at the end of the session, I will pay her back.
When I look at the state of the department's finances and some of the graphs I see here, I realize that the Department of Natural Resources has undergone major cuts.
The minister has just said that 500 communities depend specifically on natural resources, and I see that these communities are quite small. They are rural communities.
It is true that my colleagues and I, regardless of party, have focused on rural issues. More or less throughout Canada and for the most part in Québec, especially in my riding, the population of rural communities has declined sharply and it is quite disheartening.
What I see at the federal level, not everywhere because it is disappearing more and more, is the Canada Flag on the little post office. If the postmaster is unfortunately removed, the flag disappears too. It is quite sad.
In forestry, there was something that was very good, and I would have liked my colleagues from Northern Ontario to have been able to benefit from it: it was the Eastern Plan. It was wonderful. For various reasons, the Eastern Plan was cut even though it was exactly what these small communities needed. People worked and could improve their own land, but the program was cut drastically.
Madam minister, you are going to tell me that you did not make that commitment. It is true that it was the Mulroney government. You extended it for one year. That was good, and I am going to continue to disapprove its cancellation for as long as I sit on this committee.
It should have been continued, because in forestry, everyone agrees that for every dollar invested, the government receives $2, $3 or $4. There are some people who can defend that argument.
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Therefore, I assume that small communities have not had their fair share in the area of natural resources. Madam Minister, I invite you to come to the Gaspé region, perhaps not during the election campaign, but afterwards. Come and see our forests and the mines that are being exploited. You will see how the small neighbouring villages keep on getting smaller. You're going to say that that's not your jurisdiction. That's true, but there have been cutbacks in agriculture as well, as well as in transport. There have been cuts in just about everywhere.
I don't know what concrete examples I could present, except a few examples in the area of forestry. I would hope that those members who will come back, and I hope I'm among them, but perhaps not on this committee, will look at the importance of forestry.
There is another area that concerns me and that concerns all of Canada. The government is trying to find ways to attract PHB in the Northwest Territories and to sell raw diamonds that will be produced there starting in June 1998, according to what I'm told.
I'm told that these diamonds will be sold in Belgium because we don't have the necessary expertise in Canada. Are we going to send these diamonds in large packages to have them cut in New York, Antwerp or in Israel? Couldn't we instead make small packages for which our cutters could make offers? That would help enormously. I think we could cut these diamonds in a small village. I don't appreciate being told that we don't have the necessary expertise. Expertise can be acquired very quickly, Madam Minister, and you know that full well.
I hope that I wasn't given only bad news. We were told that certain steps had been taken so that these diamonds could be sent to Belgium for cutting. The government will lose out, and especially our small parishes. This could be done anywhere in Canada, perhaps not in hundreds of communities, but at least in a few anywhere in Canada and Quebec to create jobs.
I can only conclude that the government has missed a great opportunity, particularly in forestry. This had started out very well, but for financial reasons, the project was axed. I can tell you that in Quebec - I won't speak for the other provinces - this hurt a lot. Many people have lost their jobs.
You're surely going to tell me that the government has just injected over $5 billion, and perhaps even $6 billion, to help forestry companies. That's all fine. However, those millions are spread over three years, I believe. That's very well, and I thank the government for it, but what will happen at the end of three years if this unfolds in the same way as the Eastern Plan?
A great deal of hope is created. Work is undertaken, but after two years, people are told it can't be continued. It is believed that people can take charge of their own affairs. You know that it takes time for a tree to grow and to create wealth. However, as I said earlier, is an investment.
.1600
If we do nothing, I can tell you that in Quebec, in 15 years, they'll be almost no more small villages with less than 500 people.
You know what's going on in agriculture and other areas. I'm talking about certain places, not in the St-Lawrence Valley, but in the Matapedia Valley and in southern Gaspé. You don't have to be a psychic to know they won't exist any more.
Madam Minister, I'm asking you to think about that. I think that the committee has made valid recommendations, but if there is not enough money to implement them, that money will be given to another department.
I wonder what concrete steps a committee can take if its recommendations cannot be implemented for lack of funds.
Thank you.
I would like the minister to answer all my questions, but especially the one about diamonds.
[English]
Ms McLellan: Thank you very much, monsieur.
You raise some quite valid points, and let me say that it was with no joy that my department and the federal government withdrew from programming such as the FRDAs, a specific example of which was the Plan de l'Est. But it is fair to say that we all know of the fiscal situation in which we found ourselves. So that's one thing to keep in mind, that while it wasn't easy, departments like mine had to deal with program review cuts and refocus on our core activities.
That leads me to my second point, which is that the provinces - and, monsieur, in particular the Province of Quebec - have made the argument that the federal government should withdraw from those activities in areas such as forestry and mining that are more appropriately carried out by the province.
[Translation]
Mr. René Canuel: You have to be careful with compensation.
[English]
Ms McLellan: Except that these were functions that we undertook through the FRDA that dealt with, if you like, on-the-ground woodlot management and silviculture, which are clearly within provincial jurisdiction, and therefore we wouldn't be in a position, nor would it be appropriate, to provide compensation for activities that are within provincial jurisdiction. It's quite true that quite some years ago the federal government undertook to fund certain activities that were within provincial jurisdiction, and I think you, monsieur, would admit that has been something of an irritant with the Province of Quebec and some others, including my own Province of Alberta from time to time.
Therefore, what we decided was to withdraw from those activities that were quite clearly within provincial jurisdiction. So we have left that now to the provinces to deal with, and we in my department, representing our involvement at the federal level in forests, have defined our core activities to include things such as research and development, and we carry on important collaborative relationships in your province - for example, at Laval University - but also across the country, in science and technology, environmental issues, international issues involving international environmental and trade issues and things like that, and aboriginal or first nations forestry, which is important in your province as it is in most of our provinces.
So at the end of the day I think the program review exercise was a positive one for my department and for the government, and for perhaps a sorting out of the appropriate responsibilities between federal and provincial governments as they relate to the forestry sector. We're focusing on those things that are truly national and international, and the provinces are focusing on those things that are local, such as the management of private woodlots, be it in the province of Quebec or elsewhere.
.1605
That having been said, much of the science and technology that we do across the country can be of use and can be applied by private woodlot owners, and obviously that which we do as it relates to international markets and research on value-added, all of that, can be of assistance to the local woodlot owner, whether it's in your riding or elsewhere. But it is fair to say that we have refocused and redefined our core functions, in part at the urging of the provinces.
Your second question was in relation to BHP, and I think those things you talked of - the cutting of diamonds, for example, which is actually, as I understand it, a fairly highly skilled task - will be subject to private commercial relationships between BHP and others.
As you know, the diamond industry is a fairly regulated one worldwide and it is a global industry, but I can assure you that in the Northwest Territories the territorial government is most interested in ensuring that they benefit as much as possible from the development of their natural resources, and therefore they certainly have raised the issue of what value-added can be retained, particularly in the territories or perhaps in other parts of the country. But you might imagine that the territorial government's main priority is with what aspects, if any, of adding value to these diamonds could be carried out in the Northwest Territories.
I know my colleague Ron Irwin, who has responsibility for economic development north of 60, has been in discussions with the territorial government, with first nations north of 60, and with BHP.
I cannot say here today what the plans of BHP are, what discussions the territorial government or others may be having with BHP, but I can assure you that everybody, including BHP, is very aware that the territorial government wants to maximize the economic opportunities for their people as they relate to the extraction of this very valuable natural resource.
There are a number of value-added processes involved, some quite simple, others such as cutting not so simple, some of which may or may not ultimately be located in the territories or elsewhere. But those are going to be primarily left up to commercial relationships or arrangements entered into by BHP. But it is an issue we are very sensitive to. Wherever possible, we would like to add value to natural resources here in Canada.
The Chairman: Thank you very much. Mr. Ringma.
Mr. Bob Ringma (Nanaimo - Cowichan, Ref.): Thank you, Mr. Chairman.
The minister started by thanking this committee, and I'd like to reciprocate by thanking the minister for establishing a climate in which we could exchange views freely, in which open dialogue occurs. I think that's as much here as with industry, so you have my compliments on that.
Rather than make a speech myself, I have several smallish, I hope, questions and I'd like to give them one at a time. None of them, you'll be happy to know, concern Bre-X.
But I would like to start with the price of propane and natural gas. You're very well aware, I'm sure, of what has happened this last winter and the effect the tremendous rise in price has had, especially on low-income families.
So question number one would be, Minister, what is your perception of this problem and what have we been able to do, if anything, to help the people who are affected by that?
Ms McLellan: In relation to propane, this was an issue, as committee members are probably aware, in December, January and February primarily. One other thing I should say is that the prices for propane are set by the market. We don't set the prices and it's my view that we shouldn't set the prices. We should make sure there is no collusion in setting prices. We should make sure that those who sell propane are doing so in a way that is not anti-competitive, which is within the jurisdiction of my colleague John Manley and the competition branch.
.1610
But related to propane, a couple of things came together at one time: one was very high demand and the other was very low inventories. What that does, if you operate within a market system, is push your prices up. And that's what we saw - those price spikes during that period of time.
What's interesting now - and Mike, correct me if I'm wrong - is that by the end of February or the beginning of March, one saw those prices coming down, again because demand was less. We had some very cold weather early, both in Canada and the United States, which increased the demand, pushed it up, and because of the low inventories there was a price increase. But the market worked that out. If you look at propane prices now they are no higher, as I understand it, than they usually are.
I guess committee members have to put this in the context of the market system. Beginning in the mid-1980s with natural gas, we have moved to highly deregulated markets where demand and supply determine prices. Yes, at times if there is a shortage, as there was with propane during the period I've mentioned, it's going to push the price up. But I think the committee has to seriously consider whether you would want to change that situation. I know it's difficult for people at the time, but it seems to me that to interfere with the normal operation of the market as it relates to commodities like propane would be a very dangerous thing for us to do.
Colleagues on all sides of the House - certainly from our side and the New Democrats, and I think your party as well - have raised the whole question of gasoline pricing, because from time to time you see these prices spikes. Sometimes in our local communities we have gas wars. Again, you have to think about whether you want to interfere with the normal operation of the market.
As it relates to gasoline prices and any prospect of price fixing or collusion, the competition branch recently looked at this issue again, on the request of my colleague John Manley, and determined that there is no evidence of anti-competitive prices. What you have is the market at work.
Therefore, my comment on this is that our market-based system works very well overall. It has led to huge development in the oil and gas industry. One might say it has been almost a frenzy of activity over the past number of years with the development of major new markets in the United States - tremendous economic activity. That's all market-driven. Therefore, I would not want to open the door to heavy-handed government regulation of the markets that would deal with these difficult, yet fairly sporadic and not very long, price spikes for commodities like propane.
Mr. Bob Ringma: Moving to another area that particularly hurts low-income families, there's this thing called PUITTA, the public utilities transfer tax, which the government saw fit to cancel. That means there is $200 million less available to people in Alberta. When considering all of that, Minister, what have you been able to do there to give some relief to low-income people?
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Ms McLellan: In Alberta I believe we have the cheapest energy prices in the country. The withdrawal of the PUITTA rebate did increase most Albertans' bills by between $2 and $3 a month, but that obviously depends on one's individual situation.
PUITTA was a rebate program put in place many years ago by the federal government when there existed similar programs at the provincial level. The Province of Alberta had a rebate scheme as well as the federal government. Alberta chose to repeal its rebate scheme, I believe, in 1990. The provincial treasurer at the time indicated that they were doing so for fiscal reasons, that it was important to deal with the deficit and the debt and they could no longer continue to provide the rebate at the provincial level. Quite truthfully, I think the government and the Minister of Finance felt we had reached the same position by budget 1995 when PUITTA was repealed at the federal level.
We do acknowledge, and the Minister of Finance has commented on this fact, that there is a structural problem created by the Constitution because one level of government cannot tax another level of government. In some provinces there are provincially owned crown corporations that cannot be taxed by the federal government. But in Alberta there are private sector companies like TransAlta and others that obviously can be taxed by the federal government. So the form of corporate ownership, whether one is a crown corporation or a private sector company, can lead to inequities in the application of the tax system.
We would prefer that this were not the case. Quite clearly, we would prefer if everybody, regardless of corporate structure, were treated the same way for the purposes of federal taxation. That's why the Minister of Finance asked the federal-provincial working group of ADMs to sit down and work with industry to see if there was some way this larger issue could be dealt with - the larger issue being that the federal government cannot tax provincial crown corporations, utilities.
We need to think about how to level the playing field in this area regardless of the form of corporation or ownership, whether it is privately held or a crown corporation. It's a very difficult issue. The task force that was put in place by the ADMs of taxation to look at this issue met for a considerable period of time on this, with a number of provinces and utilities represented.
There is no easy answer to how we level the playing field in this area, but it is something the Department of Finance continues to work on and look at in partnership with both the provinces and the private sector, with both companies like TransAlta and Nova Scotia Power, privatized a number of years ago, and provincial crown corporations like Ontario Hydro and B.C. Hydro.
I can't say there's an easy resolution to this issue. There is a constitutional impediment to our ability to tax the provincial level of government. Within that, one sweeps in provincially owned and controlled crown corporations.
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The Chairman: We're going to go to the government side, and then I'll give each of the opposition parties one more question to the minister.
Mr. Reed.
Mr. Julian Reed (Halton - Peel, Lib.): Thank you, Mr. Chairman.
My first comment, Minister, is what a difference three years makes.
Ms McLellan: Do I look older?
Mr. Julian Reed: You've never changed. You look as young as you ever did.
Ms McLellan: Thank you.
Mr. Julian Reed: But I do recall your first estimates submission and the words that were put together there. I see that in this one, on page 2, you've mentioned renewable energy four times.
Ms McLellan: I thought you would be pleased by that.
Mr. Julian Reed: It's quite a reversal.
To me it's incredibly important. Specifically, if we are going to meet our greenhouse gas targets, or if we are going to come close to meeting our greenhouse gas targets, the process has to include applied renewable energy. Unless you shut down the economy of the country, it has to include that.
One of the concerns I have is that the regulatory process that results in approvals for the application of renewable energy doesn't really always rest with the federal government. It rests to a large extent in the provinces, and therefore provincial policy really has a lot to say about whether the best intentions of this department ever see the light of day. Just recently Ontario Hydro had begun with this wonderful green energy program and has since thrown it in the ashcan. It no longer exists. Yet there were high hopes for the potential it brought with it.
I'm just not sure how the Department of Natural Resources can tackle that to make some of these things happen. But we are in a kind of catch-22 situation.
I was very pleased to hear your reaction to the Think Rural! work that this committee did. I was privileged to have a very small part to play in it. I think it's important that the ministry understand - and I'll repeat something I said to this committee not too long ago - that in order to sustain a vital urban Canada, we depend on a vital rural Canada. It can't exist without a vital rural Canada.
I think of the young 24-year-old stockbroker who drives from north of Toronto into town every day. First of all, he's speculating in commodities and corn futures. Well, if he's going to do that, there has to be a bushel of corn. He probably takes for granted the fact that the suit he's wearing, the car he's driving in, the breakfast he ate, and all of those other things depend on rural Canada.
It's my hope that the ministry will take some of those recommendations very, very seriously. We found some areas in rural Canada particularly in need of coming into the 21st century as quickly as could be physically done under the financial constraints the government has to work with. I'm just hopeful it will become a major part of your consideration.
I must comment on Monsieur Canuel's comment about diamond cutting. I watched the Premier of Newfoundland state quite categorically that Voisey's ore was going to find processing in Newfoundland-Labrador, and whether or not the federal government can have a role to play in encouraging these things to happen, it's precisely this kind of thing that has to happen in rural Canada. If we don't have the talent there right now, the talent can be created one way or the other.
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So I congratulate you, Minister, on the thrust you're taking. I hope and pray that after certain events in the next few months or whenever they take place, we'll be able to sit across this table again and watch the implementation of some of these things you have embraced so enthusiastically.
Ms McLellan: Thank you very much.
Can I just respond to a few things Mr. Reed said?
On your comments about renewables, I agree completely that to achieve our climate change commitments - and even for more general reasons that speak to the overall economic and environmental health of our country - it's going to be important to determine the right balance of a diversity of energy sources. I think renewables have to be an important part of the energy mix in this country, and it's no secret to anyone here that really they haven't been, other than hydro.
My department is very committed, hence our new renewables strategy. We're very committed to working with the renewables industry and others, be they solar, wind, biomass or the hydrogen fuel cell with Ballard. My department is involved in all these forms of renewable energy. It is going to be very important to us and to the rest of the world, because the technology we develop in these areas we can then share with the rest of the world. That's going to help dramatically in dealing with the challenge of global warming and climate change.
Just in case people don't think we make progress, this week alone, if you've listened to the news regarding Ballard, there was a very important announcement. Some very exciting things are happening with their hydrogen fuel cell research. This week they announced a major agreement with Mercedes-Benz for a $200 million infusion of capital from Mercedes-Benz to push fuel cell technology forward much more quickly than people might have thought even five years ago. There is going to be another significant announcement next week, I think, another partnership that Ballard will be entering into, the details of which we will know next week.
So there are exciting things happening with the renewables, but there's no question that we need to ensure that as much as possible they operate on a level playing field with conventional sources of energy, fossil fuels. That's why the Department of Finance and my department have done what we have over the past two budgets related to the tax system, and are working to try to provide a level playing field so that renewables are not disadvantaged in comparison to conventional oil and gas, for example.
Mr. Julian Reed: Precisely.
I have two comments, if I might be allowed, Mr. Chairman. One is the question of the costing of energy sources. We haven't addressed the business of whole costing at all, and when we do, that playing field may change in perspective. The other thing I would caution us about with the fuel cell as a renewable is that it depends on the prime mover.
Ms McLellan: That's true.
Mr. Julian Reed: If the prime mover is natural gas or coal, it's not a renewable fuel, but if it's wind or hydro power or whatever, it can be classified as renewable.
Ms McLellan: Yes, you're quite right.
Mr. Julian Reed: I would like to throw on the table this business of whole costing, because it does change the scale somewhat in terms of the value each of these energy sources has.
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Ms McLellan: Yes. We are doing work on that. The Department of Finance is doing work on it. Those kinds of issues clearly are important ones that have to be addressed. We have to get a better handle on the total costing, as you say. There's no question that is ongoing work. The more we know, the better the opportunity we have to understand the full implications of each of these sources of energy and how they should be treated in relation to each other.
Mr. Julian Reed: It's not an easy study. I know that. The United Nations and B.C. Hydro have done some very good work on it, but it's sort of in its infancy.
Thanks, Mr. Chairman.
The Chairman: Thank you, Mr. Reed.
I'm going to be strict this time, but I'll give Mr. Canuel five more minutes for questions and answers, and then we'll go to Bob for five minutes. If there's anybody left on the government...we'll do five minutes.
Then, Bob, I think you want to table something, is that not right?
Mr. Bob Ringma: Yes, presumably after the minister has....
The Chairman: Yes.
[Translation]
Mr. René Canuel: I'd like to get back to rural communities. It seems to me that the government sometimes does ante up considerable sums of money, not to say millions. I'd like quite a specific answer. I'm thinking in particular of Hibernia.
Why is it that at a given time, your government backed Hibernia, which is a bottomless pit, a cash sucking vortex, a sinking ship, etc? I'd like to know why projects like that were chosen over others, with the result that there's nothing left for rural communities.
Could you explain how you can contribute to a project like that when the next day I'm told that the government is in debt and that we must deal with the deficit? I agree that we should cut the deficit, but how? Where do you cut? You let down small parishes, rural communities. That's what's been done especially since 1993, whereas in other areas, the government is very generous. No one seems to worry about that.
If the government continues like that, rural communities will disappear. There will be megaprojects scattered everywhere. We will be investing in them and the map of Canada will then have to be redrawn. Il will be look very differently from what it looks now and young people from rural communities will leave their region. Couldn't the government get a little backbone and tell businesses to consider doing this processing right here in Canada?
[English]
Ms McLellan: Thank you.
In relation to Hibernia, let me say that it is a megaproject and it is a reflection of a policy of a number of different governments of Canada, just as the FRDAs and the MDAs were a reflection of various federal government policies over the years.
You may remember that Mr. Martin, three years ago now, in one of his earliest economic statements made it very plain that this government is out of the megaproject business. That's not only because we have to deal with the deficit. It's also sound policy. The federal government should not be investing Canadian tax dollars in projects that are better funded by the market. If there's a demand for the product, if the time is right for the product, the market will respond, and the market should provide the investment capital necessary for the project to move forward.
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It is fair to say that the Hibernia project was somewhat unique in that one of its purposes was to open up an entirely new industry in Atlantic Canada. So the investment in Hibernia by the federal government is not only for the development of the Hibernia field. It also provides the foundation for all the other developments we see taking off in eastern Canada off the coast of Newfoundland and Nova Scotia, as it relates to the offshore, as it relates to other oil fields and natural gas fields. While the Auditor General would never look at it this way, as a matter of public policy one says you made the investment in Hibernia not only for the specific project but also for all those other developments we now see, all that private sector money, all those jobs and all those skilled trades people that Hibernia provided the base for.
But having said that, Mr. Canuel, this government is out of the megaproject business. We are sorting out our core functions. We believe that which the market can do, they should be left to do.
I have to correct one thing you said, and that was in terms of the ship sinking, or something like that. Let me reassure everybody that in May there's going to be the final tow-out of the gravity-based structure to the Hibernia field. Important milestones have been achieved over the past three and a half years. The gravity-based structure was towed from the construction site to deep water. It did not sink. In fact, it floated, which was a huge relief to everybody. The modules have now been married with the base. What we have is this quite amazing technological and engineering feat, which will be towed out to the Hibernia field on May 7, I believe, weather permitting.
So, Mr. Canuel, I would like to reassure everyone that although there are no guarantees, mind you, our best engineering specifications and prognostications indicate this engineering marvel, which was described by Time magazine as the eighth wonder of the world, will in fact be successful and that we will see the first barrels of oil produced from Hibernia in late November or early December.
I'll stop there. I think my time is up.
The Chairman: Mr. Canuel, I'm going to give you 30 seconds only, and then I'm going to cut you off.
[Translation]
Mr. René Canuel: I wasn't referring to the engineers or the gravity-based structure itself. I was talking about the financial aspect. If you can tell me this project will be cost effective within five years, I would be very glad.
[English]
The Chairman: One brief last comment, Madam Minister.
Ms McLellan: I don't think it's a bottomless pit. In fact, when we came to power and after we had a few months to assess the Hibernia situation, we made it very plain to the other owners - we of course own 8.5% of Hibernia - that they could not look to the federal government for ongoing subsidization. We would live up to our existing agreements. We have done that. But no additional funds were going to be made available. I expect that ultimately this will prove to be a reasonably good investment for the federal government.
The Chairman: Thank you. Mr. Ringma.
Mr. Bob Ringma: The estimates, Minister, show you're going to do a cut of about $42 million to Atomic Energy of Canada Ltd., three-quarters of which appears to be in R and D. I think we all agree that we need more R and D. In fact, your red book said let's go; we'll restore funding for research and development. So how do you square the two, cutting that much with the proposal -
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Ms McLellan: You're right to point out that AECL has taken a major cut. I think it's about 40%, from $174 million down to about $100 million. They're doing that in about two years, a little shorter timeframe than departments have been using to implement their program review targets. So the challenge was substantial for AECL.
Having said that, it comes back to core functions. The core function of AECL is marketing the CANDU reactor. With the economic pressures placed upon AECL because of the decrease in government subsidization, they had to determine what the core functions were that supported the marketing of the CANDU reactor.
There is no question that over the years they got into more and more science - basic, fundamental science. Nobody would deny that much of it was very good science, but it was unrelated to the function of marketing the CANDU reactor around the world. So what AECL has done to meet its program review targets, just as we expected every department and every other agency to do, is to concentrate on the core function. Their core function is the marketing of the CANDU.
Difficult, and dare I say sad, as it was to see some of that basic science discontinued, that's the reason it was discontinued: it no longer fits within the mandate of AECL. That's why we looked hard, and in some cases were successful, to find others to pick up aspects of the basic science, for example the National Research Council. We've forced AECL to focus on what it should be doing, which is selling CANDU reactors and the things related to that. That includes issues of waste and how to deal with nuclear waste. But some of the basic science, albeit good science, had to be cut. We have found a home and other funding sources for little bits of that basic science, but it is fair to say that some of it had to be let go.
The Chairman: Go ahead, Bob.
Mr. Bob Ringma: There is a bit of a contradiction there, though. I agree that you have to get back to basics and all that, but I think it was $3 million that was required to sustain the accelerator at Chalk River. That same amount of money was found for Art Eggleton to give to the research centre in Haifa, Israel. From a political point of view it seems that this is too blatantly political. Maybe it's not, but it would be nice to hear what you -
Ms McLellan: I don't know anything about my colleague Art Eggleton's or his department's involvement with funding institutes or initiatives elsewhere. I remember the day that question was asked in the House and I know that Art did answer it at that point as it related to his department.
I have to focus on AECL. I have to focus on its budget, just as it does, in terms of meeting its program review targets. That's what we did, and as I say, unfortunate as it is, there was not additional funding. We worked very hard with others, the National Research Council and other organizations, the private sector, to see if it was possible to find additional funding to maintain the TASCC project, but at the end of the day it was not possible. We have to operate within the budget envelope provided to AECL, and I can only focus on that and do the best I can within that mandate.
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Mr. Bob Ringma: I guess the question it begs is simply this. Could you not have some sort of discussion in cabinet with Mr. Eggleton to say, now look, we need $3 million here; you seem to have it over there; it just looks bad to be giving it out, even though it's obviously not in your budgetary control.
Ms McLellan: I didn't talk to Mr. Eggleton, but I did carry on lengthy discussions with the President of the Treasury Board, Marcel Massé, who ultimately has control over all departments and ministers in accountability for spending. We worked very hard to see if it was possible to come up with some additional funds or, as I say, supplementary funds from other non-governmental sources. The Treasury Board certainly worked very hard with my department on that. Unfortunately it didn't work.
The Chairman: Thank you very much, Madam Minister. I very much appreciate the fact that you are here today; also your kind words at the beginning about the work of this committee. I know all the committee members appreciate those words. I also want to compliment you and your department and the officials who are here, officials who have been here many times before, for all their cooperation, and sometimes patience, in going over the information with us. We very much appreciate it.
Ms McLellan: Thank you. It was a pleasure.
The Chairman: I would like the committee members to stay. The meeting is not being adjourned. We have a couple of motions to deal with.
The first one is I have a notice of motion from Mr. Ringma, who is going to table the motion.
Mr. Bob Ringma: The motion is very simply that I move in vote 20 for the Atomic Energy Control Board, under the Department of Natural Resources, the amount of $38 million be reduced by $1.3 million to $36,817,000.
The rationale for that is just, in a sense, trying to complement the cuts the department itself has made in estimates to say, well, fine, we're not in favour of cuts to research and development but there appear to be other places where perhaps it could be taken out. That's what we found here, that there are grants and contributions that total $643,000. I don't know all the details. Some of them are given under figure 26 in the estimates, which lists a contribution to the Swedish Radiation Protection Institute.
Well, that was before. That's no longer valid. But contributions for a cost-free manpower assistance program...I don't know how they rationalize that contribution, a contribution for a cost-free manpower program which will cost $550,000.
Then there are others, one to the Swedish Nuclear Power Inspectorate, totalling, in any event, $643,000. Then I see an item in estimates, minor capital, for another $661,000.
Those are the two figures that combine here to make me say, well, fine, let's move in that direction and see if we can chip it down a little more, by $1.3 million. Thus my motion on vote 20.
The Chairman: Thank you. Are there comments from members?
Mrs. Marlene Cowling (Dauphin - Swan River, Lib.): Thank you, Mr. Chairman.
I would like to know what background information or what analysis or what documentation you have to support the motion you have put forward.
Mr. Bob Ringma: I have nothing, Marlene, save the estimates themselves. It's simply here. I don't know enough about it. That's presumably why we have meetings like this. If there are experts here who can answer the estimates questions, then I presume that's why we do it on a day like this, when the minister is here, or when her staff are here.
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All I see is what I can read. On page 3, figure 26, details of grants and contributions, they list the estimates for 1997-98.
Mr. Julian Reed: It's figure 26.
Mr. Bob Ringma: Figure 26 is right. The other one is under figure 23, which simply says ``minor capital''. With a shrinking budget - and for sure AECL is being shrunk by quite a measure here - why do we need minor capital? I don't know the answer. Therefore, I'm proposing the cuts.
Mrs. Marlene Cowling: Mr. Chairman, I can't see myself voting in favour of something like this if there isn't anything substantial to support it. At this point I would have to say that I can't support it. I will be voting against it.
The Chairman: Are there other comments?
Mr. Bob Ringma: Maybe I could ask a procedural question. Is this the forum for discussing estimates?
The Chairman: Yes, it is.
Mr. Bob Ringma: Therefore, if there are questions asked, presumably there's someone with answers to offer. Or is the question asker supposed to provide the answers too? I don't know.
The Chairman: I'm going to give you a personal feeling from the chair. If you make a motion that you don't think we ought to spend this money, that's fair enough. But I think Ms Cowling is asking whether, if you don't think we ought to spend that money, you have a specific rationale for not wanting to spend it.
For instance, you've mentioned the small capital budget, which I notice is only half of what it was two years ago. You might say that you found out that with this budget they're going to do X, Z and R, and you don't think X, Z and R need to be done. I think that's what Marlene is asking for.
But you are entitled to make the motion and you are entitled to put on the table whatever information you feel is appropriate.
Mr. Bob Ringma: Mr. Chairman, I guess it points out the difficulty inherent in all of this. We are all pressed for time. You say, look, here is my book of estimates. What can I possibly do here that is going to contribute a little to rigorous thinking on where we might cut? With the amount of information available to us as ordinary MPs - unless it was a big number and you really wanted to pursue it and go to the department itself - it's almost impossible to do.
The Chairman: To take the prerogative of the chair, I'll address that in two ways. One is that we're fortunate in being one of the committees under the new process. The information we get is at least put in terms of some strategic objectives the department is trying to undertake, and that's put right into the estimates. That's something new; it wasn't there before.
I also sit on the liaison committee, and the official opposition and the government are on that committee. The committee has produced a report, probably for action in the next Parliament, that will go even further in enhancing the ability of individual committees to have additional input.
I hear what you're saying, and I think most committee members from the government and the opposition side agree with what the liaison committee is trying to do, and probably agree with the progress made in this term. I think we are moving towards what you want.
Mr. Bob Ringma: Just to finish my input, I will try to respond to Ms Cowling in a very short way.
In a climate in which we are seeing shrinking in AECL and in other budgets...and that's a good thing; it's going in the right direction. But where we see that shrinking, should we not try to alleviate the pressure by chopping areas other than R and D, specifically where we're giving grants and contributions outside AECL and where we're spending money, again in a shrinking climate, on minor capital, projects or whatever they are?
[Translation]
The Chairman: Mr. Canuel.
Mr. René Canuel: Does this kind of motion have to be seconded?
The clerk of the committee: No.
Mr. René Canuel: Before saying whether I'm opposed to this or not, I'd like to take the time to examine it. I think we are coming back tomorrow. Could we postpone this till tomorrow? Personally, I'd like to reread it. What will we do with this?
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[English]
The Chairman: We can do that with the unanimous consent of the committee. That'll give people a chance to take a look at it, if they want.
Mr. Reginald Bélair (Cochrane - Superior, Lib.): You can't vote on something if you don't know what you're talking about.
The Chairman: Okay. We'll defer this until tomorrow, which reminds me to say there is a committee meeting tomorrow morning at 11.
Mr. Bélair.
Mr. Reginald Bélair: We're deferring it until tomorrow on the assumption Mr. Ringma will supply some details of the cuts he wants to make.
Mr. Bob Ringma: If I have more, I'll certainly be here with them.
The Chairman: Mrs. Cowling.
Mrs. Marlene Cowling: Mr. Chairman, first of all, the motion has come to this table without any supporting documentation. It would seem to me to be a waste of taxpayers' dollars to bring this committee back to this table again if in fact Mr. Ringma is not prepared to bring some supportive documentation with him. At this point, we are here. I would hope that if there were no intent of bringing any kind of supportive documentation, we would move ahead with the vote on this particular motion.
The Chairman: Bob, will you make sure we have some additional information tomorrow?
Mr. Bob Ringma: Yes. Whatever I can find I'll certainly be happy to bring with me.
The Chairman: Okay. I'll also point out that AECB is in fact here tomorrow. They are a witness tomorrow on another matter, so we should be able to get some information.
Mr. Bob Ringma: Okay, that's fine. But tomorrow's meeting is not being called on account of my motion.
The Chairman: No, but we will deal with that at the end of the meeting.
Now, there's one last piece of information I'd like to discuss with the committee. You can say yes or no, at your pleasure. As the minister mentioned, our report on rural development has been a popular one, and there have been significant demands for it. In fact, the demand has been so significant that there are no longer any reports available to provide to you people.
Mr. Julian Reed: It's a best-seller.
The Chairman: The clerk has provided me with some quotes. We can do this one of two ways: we can get additional copies of the report by actually having them printed or by having them photocopied. To have 300 additional copies printed would cost $1,687; to have them photocopied would cost $936. To have 500 additional copies printed would cost $2,813, or $1,560 if we wish to photocopy it.
Mr. Julian Reed: What would it cost to stick it on the Internet?
The Chairman: It is on the Internet.
Mr. Julian Reed: That means that anybody with access to the Internet can themselves pull it off and print it.
The Chairman: Do we want to leave it at that, that it's on the Internet and we'll give instructions to anybody who wants it to do it that way?
Mr. Julian Reed: Unless there is a real reason for it to be done otherwise.
The Chairman: Part of the reason could be that - and I'll just throw this out - as we found in our report, there are large sections of rural Canada that do not yet have access to the Internet.
Mr. Julian Reed: Touché.
The Chairman: But I think what you're suggesting, perhaps, is that since we have access to the Internet, we can print it off the Internet here in Ottawa on an as-needed basis. That's a good point. So we'll just let that go.
Thank you very much. We're adjourned till 11 tomorrow morning.