ENSU Committee Meeting

STANDING COMMITTEE ON ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

COMITÉ PERMANENT DE L'ENVIRONNEMENT ET DU DÉVELOPPEMENT DURABLE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 21, 1997

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[English]

The Chairman (Mr. Charles Caccia (Davenport, Lib.)): We welcome you to the committee. Mr. Miller, would you like to introduce your panel, please?

Mr. George Miller (President, Mining Association of Canada): Thank you.

Michael Cloghesy is president of the Centre Patronal de l'Environnement du Québec. Leonard Surges is manager of environment for Noranda Incorporated and chairman of the Mining Association of Canada's aquatic effects subcommittee. Walter Segsworth is the president and CEO of Westmin Resources and he is chairman of the Mining Association of Canada. My name is George Miller; I'm the president of the Mining Association of Canada. And Gary Gallon is president of the Canadian Institute for Business and the Environment.

The three of us—Mr. Surges, Mr. Segsworth, and I—represent the Mining Association of Canada, which is the national association of the Canadian mining industry. Its member companies are involved in the mineral industry straight from exploration right through to the production of finished metal, and they account for the majority of the total production of minerals in Canada.

We have handed out a package of materials, and I certainly hope members of your committee will have a chance to read it, but in the interests of eco-efficiency, if any are surplus to your needs, we'll be glad to take them back and reuse them.

We very much appreciate this opportunity to meet the committee once again and to meet the new members of it. We hope to present our industry's view on the harmonization work of the Canadian Council of Ministers of the Environment, the CCME.

The MAC has repeatedly called for greater coordination and streamlining of environmental management in Canada. We are encouraged by the progress made by federal, provincial, and territorial environmental ministers towards the common objectives of enhanced environmental protection combined with greater effectiveness, efficiency, accountability, predictability, and quality of environmental management.

We strongly support the objectives of the proposed Canada-Wide Accord on Environmental Harmonization and its subagreements, and we hope it will be signed and implemented shortly.

Environmental management is recognized as a matter of joint jurisdiction in Canada. The federal government regulates certain toxic substances and has international responsibilities in the environment. Mineral resources, on the other hand, are exclusively a provincial jurisdiction, and provincial governments regulate mine development and operations as well as processing facilities and metallurgical operations. However, the federal government's responsibility for fish habitat and for navigable waters brings federal involvement into every significant new mine development.

In the experience of MAC member companies, there is a distinct lack of coordination between the two levels of government. This lack of coordination imposes real costs on industry, on both levels of government, and on the taxpayers. We do not believe it improves environment management. On the contrary, diffuse responsibility most often leads to poorly discharged responsibility and weakened accountability.

On the other hand, we've also seen examples where cooperation has existed, and where it has existed, both the environment and the economy have experienced the benefits. Let me give a couple of examples.

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The mining industry and the two levels of government have worked constructively together on understanding, reducing, predicting, and monitoring the environmental effects of mine tailings and mine liquid effluent through programs such as the mine environmental neutral drainage program, which is a research program designed to understand and manage the problems of acid rock drainage; the AQUAMIN multi-stakeholder process, which was an effort to understand the environmental effects of mining and to identify how to reduce them essentially to zero; and the aquatic effects technology evaluation program, which was designed to discover more efficient ways of actually monitoring those effects in the environment.

In particular, the mine environmental neutral drainage program has led to improved environmental protection, lower costs, and a better understanding of the issues by all concerned. As a result of that program, Canada now has the world's leading expertise and is an exporter of environmental know-how and services in the area of mine design and operations. The results could not have been achieved by any one party working alone.

Similarly, we believe the Canada-Wide Accord on Environmental Harmonization will provide a framework for implementing the recommendations of the AQUAMIN process at both levels of government, leading to more effective and efficient regulation and monitoring of impacts of mining on the aquatic environment.

By contrast, the area where the burden of poor coordination has been greatest on our industry is the environmental assessment and permitting of new mines. Every province and territory has a process for assessing proposed new mine development. With the coming into force of the Canadian Environmental Assessment Act, every new mine development also triggers a federal assessment through the Fisheries Act habitat provisions. In the experience of our members, the resulting duplication has added months of delay and hundreds of thousands of dollars in costs to the permitting process.

Governments have worked together to make certain improvements. There are bilateral agreements in most provinces, with provisions for joint panels. The federal government has introduced a federal coordination regulation that will decrease upfront delays in deciding which federal departments require an assessment. There is now a guideline on panel procedures, which incorporates timelines. These are definite improvements. However, they do not address all parts of the assessment process and they do not ensure a single process, even though they may lead to the coordination of two processes.

However, the CCME accord and subagreement on environmental assessment does propose to go further to allow for a single lead party. We believe this could be a significant improvement, reducing delays and confusion and improving quality of communication between governments and the proponent and other stakeholders.

Such a lead agency approach was called for in the Whitehorse Mining Initiative Leadership Council Accord. The leadership accord is this colourful book, which is in your package, and on page 12 you will be able to find a multi-stakeholder consensus around environmental assessment.

The overall goal of the leadership accord of the Whitehorse Mining Initiative was to develop a new strategic vision for the mining industry, and we believe it was a very important step forward in bringing our industry into contact and into more or less one mind with other groups in Canadian society.

On page 12 specifically, the provincial, territorial, and federal governments; representatives of industry; representatives of environmental groups; aboriginal peoples; and labour articulated the following goal relative to environmental assessment:

To develop processes such that each new mining project is subject to a single timely environmental assessment by an appropriate single lead agency, which results in only one set of recommendations that meet the requirements of all jurisdictions.

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The Mining Association of Canada sees the proposed CCME subagreement on environmental assessment as a fulfilment of the goal set out by stakeholders in the WMI. We congratulate environment ministers on their progress and encourage them to proceed quickly to implementation.

In summary, the MAC believes that the CCME Canada-Wide Accord on Environmental Harmonization and three subagreements are a positive step towards more effective and efficient environmental management in Canada, reducing wasted expenditures by governments and industry while improving environmental protection.

Thank you, Mr. Chairman. That's the end of our presentation.

The Chairman: Thank you, Mr. Miller.

Are there any further interventions? No one?

Mr. George Miller: Mr. Chairman, obviously we'll be happy to answer questions or discuss any points later.

The Chairman: Does Mr. Gallon wish to speak?

Mr. Cloghesy is number two? Please have the floor.

[Translation]

Mr. Michael Cloghesy (President, Centre patronal de l'environnement du Québec): I should perhaps say a few words about the Centre. The objective of the Centre patronal de l'environnement du Québec is to define a common employer position in the field of the environment, in a context of sustainable development.

We are particularly interested in harmonization, because our members come from the most important fields of activity in Quebec. We represent approximately 100 member companies and, I would say, 18 sector-based associations. Our membership includes bankers, chemical manufacturers, representatives from mining, pulp and paper, etc.

We are not duplicating our members' efforts, since we concern ourselves primarily with issues that are of common interest. Harmonization is one such issue, Mr. Chairman and members of the committee. In our eyes, this is an extremely important matter.

If our country does not support an environmental regulatory management system which sets us apart from the other countries, we will suffer the consequences. Harmonization is such an important issue that it will have an impact on whether or not we can compete with our neighbouring countries.

We must define a system that is as efficient and as effective as possible. It must be efficient in that we must avoid duplication with other jurisdictions. Canada has considerable resources, however, as we know, the budgets of both the federal and provincial governments have been slashed. We have to do more with less, and therefore it is quite logical to envision a system that is truly effective and, to the extent possible, meets both environmental and economic objectives. Obviously, we are talking about sustainable development.

The federal government has chosen sustainable development as a philosophy and the harmonization issue ties into this very easily. If we all agree to work together, we will reach our objectives much quicker than we would otherwise with each taking its own separate path. In this initiative, the federal government must therefore cooperate with its provincial counterparts.

I don't think that we can estimate the costs associated with the absence of an effective environment system, since these costs cannot be established.

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These costs result from missed opportunities. Some investors have come to Canada and have noted the tremendous degree of uncertainty in the environmental assessment process.

There are two systems: one provincial and one federal. Why not establish a system that ensures that the investor will clearly know what the rules of the game are? This is all that the private sector is looking for; clear and simple rules; one process and not two.

We, in the private sector, want to act responsibly. All that we are looking for is the certainty that the investor will not be confronted with surprises that may delay important projects and involve additional costs.

Perhaps there is misconception amongst environmental groups who in no way view this harmonization initiative as an attempt to hand over federal powers to the provinces. Regardless of whether we are dealing with a provincial, federal or joint process, what really matters to us is to ensure that there is only one process.

It is not up to us to say that the federal system is not satisfactory. That is not what the issue is. There are even some companies involved in major projects which, even though they knew they had to comply with the provincial process, went through it not knowing whether or not they had to also comply with the federal process. They therefore, although they did not have to, requested the Canadian agency to step in and do a federal assessment. They did this simply for the sake of certainty.

Therefore, we are not trying to diminish the quality of the environmental work done, but rather we are seeking a system that is simple and clear and will provide us with some reassurance before we proceed with important projects.

The Liberal Party's Red Book deals with harmonization. In fact, the book talks about avoiding duplication with the provinces. As for the Bloc Québécois, I would say that it should get involved in this harmonization issue since, up until recently, the Quebec government has been very interested in achieving some progress in this area.

As for the members of the Reform Party, this matter should be of interest to them since they want a more effective system that will result in reduced government costs and lower costs associated with these projects while furthering the cause of sustainable development.

I could go on to great lengths about this topic, but I believe that you have got my message. Thank you very much.

The Chairman: Thank you, Mr. Cloghesy. That was very interesting.

Before I turn the floor over to Mr. Gallon,

[English]

I'll invite Mr. Robinson and Mr. Dworkin to come to the table. Then we'll hear the next three witnesses, and then open up the process to questions and answers.

Mr. Gallon.

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Mr. Gary Gallon (Principal, Canadian Institute for Business and the Environment): Thank you, Mr. Chair. It's a pleasure to be here. Congratulations on your re-election to the chair of the committee. This standing committee is a very important one to Canada and the people of Canada.

I'm Gary Gallon. I'm now working with the Canadian Institute for Business and the Environment after three years as the president of the Canadian Environment Industry Association. I spent 27 years in the environment business in Canada, first in British Columbia and then for about 13 years in Ontario and Toronto. I'm now in Montreal.

I'll speak on the issue of harmonization and what its impact on Canada could be if Canada were to sign the agreement with the provinces. We have a lot of support for harmonization. As I worked with the Ontario environment minister for five years, I feel it's important to ensure that there are no overlaps or duplications. There are often turf wars. There is often a duplication of effort and a waste of money.

This harmonization would help alleviate that. It would also help in other areas, such as technology approvals for waste site management. We have many new technologies for destroying toxic chemicals that are approved in one province, but then they have to be approved in another province. There's no harmonization there.

As for environmental standards, there's a need for better environmental standards in certain areas that cross the borders in Canada, such as packaging. Basically those areas are important for harmonization.

But we do see that there are problems with this current harmonization effort. In fact, from the environment industry's perspective there are six problems. These problems are such that we would recommend the federal government should not sign the harmonization agreement or accord at this time.

Here are the problems. The harmonization accord will result in a substantial hand-off of federal powers to the provinces. This was reported in the Ottawa Citizen in an article regarding a memo written by the Deputy Minister of Environment Canada. It said, we are cutting 200 more staff, our budgets are currently being cut by $221 million, and this is all a part of devolving our responsibilities for harmonization.

The second problem is that the provinces are going through major cuts themselves to environmental protection. We've really been happy to see all ministries across Canada cut their budgets by 25% to 30% in order to help meet deficit requirements, but what has happened to Environment Canada in particular is that their budgets have been cut by more than 40%.

So there appear to be additional agendas there, especially when you couple it with the third problem, which is a move toward environmental deregulation within the provinces, particularly Alberta and Ontario and, to a lesser extent, Quebec. Ontario has pledged to cut its regulations by 50%—78 major regulations will go to approximately 40. Alberta has done the same.

These items are all outlined in the presentation I circulated to you.

The fourth problem concerns the flaws that have been discovered in the environmental cost studies that were used by the provinces and the federal government to take a look at the cost of duplication and overlap. These studies include working papers two and three of the Macleod Institute for Environmental Analysis; the Fraser Institute's report on over-regulation; and the Conference Board of Canada report called Lean Green: Benefits From a Streamlined Canadian Environmental Regulatory System, which you may have copies of. These reports were circulated at a key time when your government and the governments of the provinces were negotiating these harmonization agreements.

I will go through this in some detail in a moment, but the flaws make it such that there are nowhere near the costs associated with overlap and duplication as one would think.

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Finally, there are difficulties with the voluntary measures that the harmonization agreement will embody. Harmonization will embody voluntary measures such as the voluntary challenge and registry program for global warming gas reduction, and ARET, or Accelerated Reduction and Elimination of Toxics. With these flaws in these voluntary measures, it's very hard for the federal government to hand off these powers.

So the bottom line is this: Canadians, the electorate, are looking for a strong central environmental protection process. That process has resided very well with the federal government, and the federal government has harmonized well with the provinces when there have been difficulties. What we would not like to see is for these powers to be let out of the box like a genie, never again to be pulled back in by the federal government.

When you see the memorandum from the Deputy Minister of the Environment, you will essentially read, “We are handing off harmonization to the provinces; but in the event the provinces do not follow through, we can always come back.” Well, you can't—the federal government cannot.

I really think the people of Canada, and certainly the environment companies of Canada, realize the importance in having a strong central body that shares the powers related to environmental protection. Otherwise, it's possible that we will have a Balkanization of environmental protection in Canada. There will be different types of environmental protection methods and standards across the country. That's why the federal government should not sign the harmonization agreement at this time.

Let's go back to the budget cuts just for a moment. In the Government of Ontario, the Ministry of the Environment has dropped by 43%, from $290 million down to $165 million. The Government of Alberta has dropped from $405 million down to $296 million. Newfoundland has cut its budget 60%, from $10 million down to $3.6 million. New Brunswick cut its environment budget from $16.8 million to $12 million. How can you devolve your responsibilities for harmonization to the provinces?

You are handing off the responsibilities to CCME. Since you've cut your budget here at Environment Canada by $221 million, you should maybe have handed off $3 million to double the budget of CCME. The CCME budget was $3 million in 1993-94. Its budget today is half of that. It's $1.4 million. So now it has twice the responsibility with half the budget.

I don't know how you and the others can handle the devolution of responsibilities through harmonization. I'd feel much more comfortable here today saying that the federal government cut $218 million, but $3 million went to CCME to help it boost its ability to harmonize the provinces. We would then clearly be in a position to accept that harmonization is what it is: the strengthening and the harmony of environment across Canada.

Let's take a look at the cost studies. The Macleod Institute was commissioned by the Government of Alberta to do a cost study showing the additional costs of overlap regulations particularly related to EA for mining, oil and forestry operations in Alberta. The Macleod Institute, in working paper 2, subcontracted Steven Kennett of the Canadian Institute for Resources Law. He began a study and within six months had surveyed of all the companies. His findings? He found no real problems with harmonization and no real problems with overlap of federal and provincial responsibilities related to EA or other regulatory purposes.

But that study was not released right away. Another study was commissioned immediately by the Government of Alberta and the Macleod Institute, working paper 3. Working paper 3 was given over to the Department of Economics at the University of Calgary. The department was asked to develop a cost model to run, with certain assumptions put into it. The problem with the assumptions was that they were based on unexpected delay: delay with people on the ground and working, money borrowed, capital equipment purchased, having all of this in place, and then unexpectedly having the federal government saying an EA is required.

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Now, those kinds of things don't happen any more according to the agreements that are in place now. They have happened in the past, especially when companies have challenged the federal authority, and the courts have come back and said the federal government has the responsibility for EA nationally.

The courts have said that several times to the federal government. That's where the company gets into trouble, on unexpected delays. But when they said on the project worth $230 million there could be up to $110 million in additional cost due to delays, that was based on unexpected. When you borrow the money the clock is ticking. But when they released working paper number three, the change was made from unexpected to unnecessary. So in the paper here you will see a quote from Ty Lund, the Alberta Minister of Environmental Protection, saying unnecessary delays cost these amounts as set out by working paper number three of the Macleod Institute.

So we'll have to be careful with these numbers, especially when they are just cost numbers and not cost-benefit numbers. The same thing with the Lean Green report by the Conference Board of Canada. It took a study done by the Roche Group in Quebec in 1994, who found there was $144.7 million annually in overly excessive expenses related to overlap and duplication. But again, their model was flawed as well.

The Chairman: Excuse me, but could you please try now to wrap it up?

Mr. Gary Gallon: Okay. So the Conference Board multiplied that number by four. They multiplied $144 million by four and got $580 million. That report has been sent to all the deputy ministers for the last year and a half to show that there is a cost of $580 million, when in fact the company that did the study said this cost is a ballpark figure, an airy fairy estimation, don't trust it. It's something to be used just for looking at.

With that said and with the report in front of you, I would just wind up by saying it's important for us to take a closer look at harmonization before we put pen to paper. Thank you very much, Mr. Chairman.

The Chairman: Thank you, Mr. Gallon.

Mr. Robinson, would you like to take the floor?

Mr. Alan Robinson (President, Packaging Association of Canada): Thank you, Mr. Chairman. It's a pleasure to be here with you. Good form would seem to indicate we should congratulate you on your re-election as chairman. We wouldn't want to be in breach of that. We certainly want to add our support and congratulations to that.

I was trying to understand exactly what my role might be here today on behalf of Canada's packaging industry. It seems that I'll be bringing you a case study on what happens when there is an absence of harmonization and the real problems it can generate for industry.

I suspect, Mr. Chairman, that you and members may not be particularly familiar with the Canadian packaging industry. It isn't a homogeneous industry as some are, such as mining or petroleum or perhaps the automotive industry. It's in fact a collection of manufacturing subsectors, perhaps as many as ten, that have come together in an economic unit whose only commonality is in the variety of materials and substances they produce, something that encloses something else, and collectively they become the packaging industry.

I'm going to go through a few facts and figures just on the first page of our brief before I share the actual situation with you.

The Canadian packaging industry generates more than $12 billion in annual sales. Exports, which now exceed $2.5 billion, have been growing at an annual rate of about 10% for the past ten years. This has produced a balance of payments surplus with respect to packaging imports.

More than 125,000 Canadians are fully or partially employed by the industry. Employment is expected to increase by more than 25,000 new jobs in the next few years as we continue to expand, particularly in the export field.

The food and pharmaceutical industry consumes close to 60% of all packaging material. Hardware and houseware sectors account for about 15% of usage, the industrial, commercial and institutional sector about 15% as well, and the balance is consumed by such industries as toys, games, cosmetics, dry cleaning, clothing, sporting goods and the appliance sector and general household goods.

On the material side, corrugated and boxboard packaging accounts for about 40% of material used, plastics about 18%, glass, aluminum and steel about 10% each, and the balance in multi-material packaging such as juice boxes, which are called aseptic packages.

While we're here to discuss harmonization of environmental regulations related to packaging, it's important to remember the key functions of the package itself. The first is to protect the product to meet health and safety regulations set by government. This includes provisions for tamper-evident packaging to avoid possible poisoning and for child safety.

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On the other side of the ledger, we have to make packaging more accessible for seniors and people much like all of us in this room, who are aging baby boomers and have less dexterity than we may have had a short time ago. The challenge between meeting the needs for seniors and safety for children becomes a fine balancing act. Not only is our industry responding to this challenge but I'm pleased to say we are world leaders in these developments.

In the mid-1980s the Brundtland report, sustainable development, and a supposed landfill crisis came together to put the packaging industry in this country under the special focus of the spotlight of special interest groups who wanted to see a higher level of environmental sensitivity in the products we produced. They prevailed on then federal Environment Minister Lucien Bouchard to take a lead role in bringing our industry under some harmonized level of control. Through his leadership and through ours as the packaging association, we founded and originated a national packaging task force, which produced a document called the National Packaging Protocol.

That protocol has been in effect for ten years, despite all manner of erosion, except by industry. The federal government has backed away from its responsibility, at least the responsibility it took on initially. It has cut staff. It has cut funding to it. It has passed the lead for that responsibility on down to the provinces through CCME. CCME has now backed away from it. They don't want to commit the money to it that they were committing to it, but they still want the results of it; and the results were, under that agreement, a political target of a 50% diversion of packaging waste material from landfill by the year 2000, in incremental steps.

I think it's important, Mr. Chairman, that I share with you and the committee that there was no particular scientific validity for that target or that goal in 1988 and 1989. It just seemed like a good number, a nice round one. It had a lot of good political charm to it and we as industry embraced it as a target. But there was a trade-off, and the trade-off has to do with harmonization.

The trade-off for our accepting that number was that there would be no changes in the regulatory regimes that affected the packaging industry unless we had failed to meet the interim targets under the protocol. All the provinces individually signed on the protocol. CCME signed on. The federal government signed on. The Federation of Canadian Municipalities signed on. Industry, of course, signed on. A variety of special interest groups all signed on. But the practical application in the face of success of meeting those targets here in the mid- to late 1990s is that only industry has kept that promise and particularly the provinces have gone and initiated new regulatory regimes in the face of and in support of their own political agendas, while since insisting that industry achieve the overall goal of the packaging protocol itself.

If it could stop there it wouldn't even be so bad on its own, but there is a further devolution beyond that, as my friend Mr. Gallon was saying, in that the reduction of transfer payments to municipalities has resulted in municipalities now attempting to raise money to deal with packaging waste. We in the packaging industry, unlike the nuclear industry in this country, really don't take on a responsibility for managing the end use of product we produce for the marketplace, any more than McDonald's goes around and tries to find out what is left of the buns, or any more than the automobile industry, which makes a car, goes around and finds the car at the end of the day to try to do something with it. But we've accepted a stewardship role as an industry. We've evolutionized and revolutionized ourselves as a packaging industry per se and put in new materials and processes which have allowed us really to be a world leader for packaging technology now.

As we look ahead at this issue, it's really important to understand that the municipalities are now caught looking for money. This is not an issue about the environment. It's not particularly an issue about sustainable development. It's not an issue about excess packaging. It's purely and simply an issue about finding money among the people in the political spectrum who are least capable of finding it for themselves. So we find ourselves trying to match up to an ambitious federal scheme through a spirit of harmonization where everyone was included, now down to the point where those lowest on the totem pole, industry and the municipalities, are left holding the bag.

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Mr. Chairman, we would be happy to take your questions on this. We support any effort by the federal government that will re-establish a greater level of harmonization and allow our industry to actually know the rules that will prevail. Mr. Dworkin is just going to add to my comments.

The Chairman: If I had your voice, I would perform La Scala in Milan. Mr. Dworkin.

Mr. Larry Dworkin (Government Relations, Packaging Association of Canada): If I could just pick up on Mr. Robinson's remarks, specifically I am going to take a look at what's happening to beverages in our industry such as soft drinks, juices, mineral waters and a variety of these products.

In each province of Canada we basically face a different regulatory regime, a different rule. In Nova Scotia, for example, we face what is known as a half-back deposit. A consumer pays a 10¢ deposit on a product, and when he brings his can or bottle back to the depot he gets half of it back. In the province of Ontario there is no such regulation but there is a blue box. If he goes to Quebec there's another regulation that says there will be a total 5¢ deposit and no redemption. British Columbia has another set of regulations.

This has no effect in terms of the product itself, but it means we have to produce a separate package for each province. That is the problem we are facing.

Mr. Alan Robinson: Mr. Chairman, these are three Pepsi-Cola containers, as you will recognize. Some thought I'd brought soft drinks for everyone. But I want to point out that in the United States they might produce one Pepsi-Cola package for the whole country. This is the Pepsi-Cola container for the province of Quebec with a different lid from that of Ontario. In Quebec it has to make a statement about deposits. In Ontario it has to make a statement about being recyclable. These are different packages.

As soon as you have to change a manufacturing line from one thing to another you're doing two jobs; you're no longer doing just one job. The third can, which is for the Atlantic regions in this country, in order to meet the regulations and requirements must have not only a different lid but a different barrel as well. In western Canada they may have the Ontario lid and a different barrel from this one again.

So we're producing a real multiplicity of packages for exactly the same product, in exactly the same size, for exactly the same marketplace. Because of the lack of harmonization, which is really the point of the case study, we have six or seven different packages where one would do.

The other issue on the lack of harmonization this creates as well—and we're back on the issue of environment—is by thin-walling these containers as much as we have to meet the requirements of the protocol we find ourselves with a much higher damage ratio and a much higher waste ratio for packaging. The amount that's been estimated in grocery alone of waste material through now over-thinned or too-light packaging is $150 million per year, which comes right out of that equation. Again, a lack of harmony, a lack of constant consideration for the objective of the package in conjunction with both health and safety and the environment has led us into this plethora and variety of packaging that doesn't serve our competitive position at all. It doesn't serve consumers any differently than if it were all one package for one product.

Mr. Larry Dworkin: To put a real price on that package just so you have it, it costs us approximately 22% per unit more than our competitors in the United States. In other words, just because they can produce one package for all 50 states and for Mexico their costs are that much less. Here, it costs us about 22% more because I have to now produce a separate unit of each package.

There are other examples. A number of provinces are now looking at what they call ecologos and they each want their own. There are proposals to Quebec, Ontario and Nova Scotia and there's a federal ecologo program. We'd probably have to make a package twice as large to put all these logos on, which truly defeats the purpose for the environment when you get down to it.

If you must look at the big picture, in the U.S. our American competitors do not face any of these same kinds of regulations. They don't exist. This really puts us at a competitive disadvantage. We've been working hard to downsize. We've been working hard to become more competitive. We've put billions of dollars of investment into our industry to become more competitive so we can compete in NAFTA and in GATT. The problem is that now, as we are starting to expand, we are running up against this physical barrier, in a sense, in terms of the provinces not being at the same table.

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You can have that club, but when they all go home after the meeting they go back to their own private political agendas, and we seem to have been caught in the middle.

Thank you, Mr. Chairman.

The Chairman: Thank you.

Now Mr. Bigras will commence, followed by Mr. Knutson and then Ms. Carroll.

[Translation]

Mr. Bigras, the floor is yours.

Mr. Bernard Bigras (Rosemont, BQ): I am happy to be able to ask the first question and to play, for a few moments, the role of official opposition since the Reform Party is not present.

On the one hand, I am satisfied with the arguments put forward by Mr. Cloghesy with respect to the overlapping and duplication. This has always been very clear to us and is worthwhile stating today. We believe, as we have always believed and we will always believe that the provinces—perhaps we go somewhat further than others do—must be the only masters of their destiny when it comes to the environment.

On the other hand, this morning, some associations have expressed their concerns in giving a larger role to the provinces, given the cutbacks that are currently being made in the various provincial departments.

This morning, certain associations have told us that harmonization that is not accompanied by budgets for monitoring, inspection and standards would be very risky. Therefore, would it be possible to enter into a harmonization accord while at the same time giving more money to the provinces so that they would be in a better position to do their work?

[English]

Mr. Gary Gallon: Yes, the harmonization can work very well with adequate resources. And the adequate resources can be those of the provinces, so that if the provinces had maintained their environment budgets....

Even the United States cut their environment, USEPA, budget by 15%. But the minute they went to 25% there was major public concern, and they backed off 25%, going back to 15% cuts.

If we had a 15% to 25% cut in budgets, harmonization would work very well within the provinces. But now that they are divesting themselves of a lot of environmental responsibility and no longer have in place environmental protection capability, it's much more difficult to have this harmonization and devolution of federal powers.

Mr. Alan Robinson: At the end of the day somebody has to pay for this. It's fine to shift all these powers around from one level of government to another level of government to a third level of government, but there is only one pot of money in this country at the end of the day. There is only one pie. We're arguing about who gets what size of slice, but at the end of the day there is just that one pie.

I think great caution has to be exercised in moving the responsibility without moving the means to go along with it. That's what we're finding as an industry, as I say, at the bottom of the totem pole, as the low feeders on the food chain, if you will. But everyone comes to us expecting that we have some other pot of money that you don't have some tap into and that voters aren't voters when you're talking to us, but voters are consumers. I'll tell you, folks, it's all the same people, it's all the same pie and it's all the same money.

Our experience with the provinces hasn't been very positive in terms of their accepting more responsibility simply because somebody says that they have it. We've continued to accept ours, and will continue to do so, but it would be very naive to suggest that just because you give them authority, even if they might be quite zealous to have the authority, they're actually going to commit the means and take the political risks that are necessary to raise those means in order to fulfil the mandate.

• 1635

Mr. Leonard Surges (Manager, Environment, Noranda Mining and Exploration Inc.): Thank you, Mr. Chairman.

I would like to emphasize that we don't see this as a one-way street. There has been a lot of discussion about devolution, with some very good examples, in fact, where federal leadership might be very helpful. On the other hand, we're very convinced that in the delivery of these programs there also are functions that are best performed by provinces.

At the end of the day, coming back to the question about resources, we believe that there is the potential for improved efficiency; that the total costs can be reduced without compromising environmental protection; and that those economies quite clearly should be shared, just as the work should. Some tasks might be taken on by the federal government, and the province might reduce in that area. Quite the converse might be true in other aspects.

The Chairman: Thank you, Mr. Surges. Mr. Knutson.

Mr. Gar Knutson (Elgin—Middlesex—London, Lib.): I actually have questions for all three groups, so I'll try to be brief.

On the issue of packaging and pop cans, couldn't we solve that by having just one federal regime?

Mr. Alan Robinson: Yes, absolutely. That was the initial outlook of the National Packaging Protocol, that there would be one set of harmonized standards practices across Canada that would have eliminated all this multiplicity.

Mr. Gar Knutson: In terms of the pop manufacturers, aren't they their worst enemy in terms of the fact that they may be forced into deposits on pop cans in one province but in Ontario, they fight tooth and nail to prevent deposits on pop cans? Aren't they part of the problem as to why in some places we have to process pop cans and in some places we don't?

Mr. Alan Robinson: I think that might be a bit oversimplified. Let's put it this way; the soft drink industry—and I'm not really here to speak for them, except that their product is in my packages; I want to distinguish that—was looking for what it has analysed to be the most cost-efficient way of managing the residual waste of its product. It's of the opinion and of the analysis that a blue box or a curbside recycling system is a superior system to accomplish that task.

If the issue is not managing waste, and the issue is raising money, then this may not be the most agreeable solution. As I was saying earlier on—and it really proves my point—the reason that these deposit systems have sprung up is not because the soft drink industry is fighting for or against them but because, in spite of the National Packaging Protocol, they suit the political provincial regime of the day, one province at a time.

Mr. Gar Knutson: If we could move to the mining industry, this morning we had evidence.... Are you familiar with the recent CEPA decision in the Supreme Court with respect to Hydro-Québec? If I can briefly summarize, the federal government sent in an inspector in terms of PCBs. It was an area where the province wasn't inspecting and they weren't doing anything about the PCBs being produced by Hydro-Québec. Hydro-Québec wanted to ignore the consequences of the federal inspection, saying the federal government was outside its jurisdiction.

The environmental groups use that as an example of why we need some redundancy in the system, why duplication is a good thing.

When we hear stories about Ontario Hydro having lead tailings going into Lake Ontario and the Ontario Ministry of the Environment not doing its job in terms of regulating Ontario Hydro, maybe it's a good thing to have some duplication in the system as a back-stop, which was the term they used.

Don't get me wrong. I'm all for one environmental assessment program. I'm all for clarity. I'm all for business people being able to know their costs when they go in and for investors being able to know their costs and to get a fair rate of return. But I'm also realistic enough to know that lots of times provincial ministries don't do the proper job of preventing pollution from taking place, to begin with. Therefore, it makes sense from time to time to have some overlap, some duplication, some redundancy as sort of a back-up system. At the end of the day, we're dealing with human health, and I think safety in terms of human health should be our first-priority concern.

The Chairman: Mr. Surges.

Mr. Leonard Surges: I'm not going to speak directly to the Hydro-Québec decision, although I am aware of it. Let me first address the question of whether a back-stop is appropriate. Let me do that with an analogy to quality in our manufacturing processes.

• 1640

Our experience is that if you take the philosophy that everybody is responsible for something—or in this instance, two parties—the end result is that nobody is in fact accountable.

In theory, yes, if one doesn't act, the other one might, but in practice one of two things tends to happen. The best case is that there is very often an extended delay while they consult and try to determine a course of action that is palatable to both. The worst case in fact is paralysis, and the poor old citizen ends up being told by one group to go and see the other, and vice versa.

I'm not saying that there isn't a legitimate concern about performance of obligations under the accord, but I would suggest that in fact there are checks and balances, and there should be checks and balances to ensure public accountability.

The sort of regime we envision is one where the standards, for example, may well be uniform and developed with leadership by the federal government. The delivery may in fact be provincial. What is proposed in the accord at the present time is simply administrative arrangements. It doesn't alter the fact that the federal government still has the authority to act if in fact the province fails—

Mr. Gar Knutson: Excuse me. I don't mean to be rude, but I've only got 10 minutes.

The federal government has the authority to go in and inspect, say, Ontario Hydro to see that it's not damaging fish right now. We sign the harmonization agreement and we agree that inspection is going to be done by the province, and for whatever reasons—political reasons or whatever reasons—the Ministry of the Environment in Ontario doesn't do the job it should do with Ontario Hydro.

First of all—unless there was a fire or some emergency—based on this agreement, which we're saying is a simple administration agreement, we'd have to put them on notice, and that period would be six months. We'd give the provincial government six months to carry out the inspections that we think they should. If they didn't carry out the inspections, my understanding is that we'd have to give them six months' notice that we're going to abrogate the agreement, and then send in our inspectors.

We have a clear case, at least with Hydro-Québec, where provincial authority didn't want the federal authority involved when it came to PCBs. I think we may have other cases. So why should this fill me with a lot of confidence? You folks said this is a good agreement and that we should sign it.

I guess I'm asking, solely from the narrow view of environmental assessment, is it one process that we can all agree on? We've had some evidence or some testimony that suggests that there are ways to do that without bringing in all this other stuff that I think people have legitimate worries about.

Mr. Leonard Surges: Thank you, Mr. Chairman.

Let me deal specifically with the Ontario Hydro example. Let me say very clearly, in fact, that there is not a federal regulation at the present time that addresses that source.

What there is, of course, is subsection 36(3) of the Fisheries Act, which is a general prohibition against the discharge of a deleterious substance. The definition of a deleterious substance is found, in fact, in a regulation made by the governor in council, and there is no such regulation that applies to that source.

The bottom line is, the case law indicates that if that discharge was acutely toxic to fish, then it would be a violation under the Fisheries Act. If you look at the provincial regulations under MISA—the Municipal and Industrial Strategy for Abatement—while I'm not that familiar with that specific sector in Ontario, my experience in mining would suggest to me that there's quite a similar toxicity requirement.

Mr. Gar Knutson: Are you saying that Ontario Hydro is not a good example because there is no federal regulation over what it dumps into Lake Ontario?

Mr. Leonard Surges: I'm not saying it's a good example or a bad one. I'm saying that there is not a federal regulation. There is the fall-back of the general provisions of the Fisheries Act, and there's no question.... I'm not here to argue that the numbers we're talking about are not large, but I think some context is appropriate.

That source, very simply, is corrosion of the pipes. If you looked at the number of tonnes of water that have gone through that same source, quite clearly it would be many orders of magnitude greater.

Obviously there were some flaws that can and should be reduced, but I don't think it necessarily warrants the alarm that perhaps some have suggested.

• 1645

Mr. Gar Knutson: That's fair enough. Can you give me an example of a recent mine, perhaps the one in Alberta, the Cheviot Mine, and the additional costs incurred to get the mine approved under the current system without the harmonization agreement being signed, and those costs as a percentage of the overall cost to the mine?

Mr. George Miller: I don't have any specific examples.

Mr. Leonard Surges: I can't speak to that. We should perhaps point out that our members generally produce base metals as well as certain industrial minerals and gold. We're really not involved in the coal business and we don't have the details.

Let me point to one example which is in fact documented in Lean Green, the publication of the Conference Board to which Mr. Gallon referred, and that was Placer Dome's Musselwhite project in Ontario.

Very simply, they had completed a provincial process and had in fact initiated the federal process under the previous federal environmental assessment and review process guidelines order, but a decision had not been rendered by the federal government. As a result of that, they in fact were caught and had to go back to square one under the Canadian Environmental Assessment Act.

Mr. Gar Knutson: When was this?

Mr. Leonard Surges: I don't recall, but it is—

Mr. George Miller: Within the last two years.

Mr. Leonard Surges: Let me say, though, that the costs were substantial. They were documented. On the other hand, in fairness, this was a problem related to the transition and I'm not sure that it's necessarily illustrative of future problems.

Mr. Gar Knutson: But you're convinced that if we don't sign this agreement, similar occurrences are likely.

Mr. Leonard Surges: To the extent that duplication does exist and that at the same time fiscal constraints have been mentioned, I'm convinced that if we don't sign this agreement we'll be making other choices about what to cut. And I think if we really share the goal of maintaining or enhancing environmental protection we should be identifying very vigorously any areas of duplication and addressing them so that we can redeploy those resources to deal with any gaps or deficiencies.

Mr. Gar Knutson: Yes. Unless—

The Chairman: This is your last question.

Mr. Gar Knutson: Mr. Gallon, you gave a perspective different from what I would have expected from the title of your group. Can you just tell me a little bit about who you represent and who you are speaking on behalf of?

Mr. Gary Gallon: Yes. We are a newly formed institute, a think-tank, so we don't represent anybody in particular. This is not a membership think-tank. It's based on having a number of associates, including the Canadian Pollution Prevention Centre, University of Toronto, and a number of thinkers such as Colin Isaacs for the contemporary information analysis. We have a hard core of environmental policy analysts who do work and we've produced five reports as a result.

The Chairman: Thank you.

Madame Carroll, followed by Monsieur Charbonneau.

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): If I may, I will address a question to

[Translation]

Mr. Cloghesy. I apologize, but I find it easier to express myself in English.

[English]

You mentioned that what's very important to the group you represent is being able to deal with one voice and to have certitude. As a business person myself, with a business background, I can certainly commiserate with that. We've seen the fruits of certitude in our economy in recent years assist greatly in bringing it to where it is.

However, in listening as I have very carefully to reports this morning about harmonization, what I'm conjecturing about is what it will be like for businesses and groups in the country to deal with the CCME. I've come to the conclusion that I'm hearing more arguments and reasoning that it will be au contraire. Instead of dealing with one level, which might very well have given you a sense of certitude, in dealing with thirteen now—and my colleague has mentioned a six-month period that can kick in—I just wonder where this certitude is in what I look at as the result of this administrative agreement.

• 1650

Mr. Michael Cloghesy: Let me try to go over that issue.

I have been following this issue now for several years, and I must admit that it has evolved. I believe that at one point the issue pertained to not a willingness but a focus on moving, perhaps devolving some of the federal powers to the provinces. This was in the very early stages. At least that was the perception.

At the moment, with the advent of the Supreme Court judgment, it's clear that the federal government can get involved in any and all environment issues. So what we're looking at now, where my perception of harmonization is and where it has evolved from my viewpoint, is more one of cooperation between federal and provincial levels of government.

So we're not saying necessarily that it's one or the other. I'm talking more in the sense of environmental assessment. We're not necessarily talking about one level of government. We're talking about two levels working together—not two processes, but one process. This is what brings about the certainty. The elimination of uncertainty would be more appropriate, I would think.

Obviously, one level of government might have to play a lead role in certain areas and another in other areas. But in general this whole focus on harmonization now is one where, I believe, we're looking at using our resources in a much more efficient way, but working more cooperatively between both levels of government.

I'm not sure if that answers your question.

I hear what the packaging association is saying. They're very concerned that there not be twelve different rules for packaging. That's a concern.

Ms. Aileen Carroll: Referring to that, that is a reinforcement from another perspective. I was speaking more of earlier inputs from the environmental law groups and others. But indeed that is an extension.

Mr. Michael Cloghesy: Does that answer your question?

Ms. Aileen Carroll: It certainly gives me a sense of what your goal is. Whether this is a vehicle to achieve your goal I'm not sure, but I appreciate that.

I would like to ask the Mining Association this question.

I listened very carefully to your report. I will take you to page 12 of the Whitehorse Mining Initiative report that you gave us. Again, I'm already hearing frequently this concept of overlap and duplication. Earlier a group emphasized that few examples of such overlap and duplication have been found. Since it is an area to which you make reference and from which you depart in favour of this process of harmonization, I wonder if you could give me some examples of that duplication in overlap with which you have had to contend within your industry.

Mr. George Miller: I can respond to that question. Unfortunately, I'm not really prepared with details, but I can provide them later for committee members if they need them.

One of the most recent mines that was permitted in British Columbia is the Kemess project. That project was subjected to a provincial mine approval process and basically passed it, but the Fisheries Act requirements were triggered—that is, the no-net-loss provisions.

After they had achieved their provincial permit, they spent several months attempting to overcome the federal concerns for no-net-loss. In fact, as far as both the province and the mining company were concerned, they had been appropriately addressed at the first level of approval.

What we were talking about were apparently nine spawning pairs of bull trout. We're talking about a $390 million project. I don't know whether these trout mate for life or how they do this, how they came up with spawning pairs. In any case, that's what was reported coming out of it. It seemed to be out of all proportion to the scale of the problem.

• 1655

In addition to that, as I understand it from the principals on the proponent side, there was significant disagreement between the British Columbia office of DFO and the Ottawa office of DFO, in that Ottawa was comfortable with the provisions under the provincial assessment and they met resistance from their own office in British Columbia. It was just an endless round of frustrations for these people in trying to get a permit when they thought they had already met the necessary provisions.

Again, I apologize for not having classes and times available in detail for you, but I can certainly get those.

Ms. Aileen Carroll: I very much appreciate the example you have given. Perhaps I was misleading in my question, because certainly it's a good one, one I have noted, but it wasn't for specific projects that have had this particular dimension to them, but rather areas of overlapping duplication, because certainly something as far-reaching as the harmonization of 13 bodies has to have encountered very serious areas of duplication and overlap to justify the process.

Mr. Walter Segsworth: I would like to make a comment about the Navigable Waters Protection Act. Our company operates a mine on Vancouver Island in British Columbia. We have a dam with a penstock that feeds a powerhouse. There's no power line—there's no correction from the grid into the mine—so we're independent of the grid. In our reclamation we are required to destroy that dam and also destroy the penstock and the powerhouse as part of cleaning up the site when we are completed. I won't comment on the usefulness of that except to say that to permit both the dam and the destruction of the dam we have to get a permit from the coast guard; and this thing is 1,600 feet up on the side of the mountain. It's about as far as you can get from navigable water, yet we require a permit over and above the permitting authority in the province or simply from Environment.

To me that's the kind of thing we're talking about; and we meet it all the time.

Ms. Aileen Carroll: Thank you for that.

I have one last question. This is in not the Whitehorse brief but in the one prepared for us. There is a submission on page 1 where you mention that diffuse responsibility most often leads to poorly discharged responsibility and weakened accountability. Do you see harmonization as the antithesis of that?

Mr. George Miller: In a word, yes. We believe if the duties and powers of the federal government were clearly delineated and the provincial powers were clearly delineated, the public and the media and the proponents would know who to hold accountable for performance. In the case where a province is not regulating adequately there are various means by which the public can intervene and identify the party, but if two levels of government are both responsible, they can each spend a lot of time saying, oh, well, it's the fault of the other.

Please understand, we're not arguing for less than environmental protection. We're arguing for more accountability. We think that will enhance environmental protection as well as speed processes.

[Translation]

The Chairman: Mr. Charbonneau.

Mr. Yvon Charbonneau (Anjou—Rivières-des-Prairies, Lib.): We have before us various evaluations of the harmonization initiative.

• 1700

These evaluations have all been prepared by organizations and people who believe in the need to protect the environment and to achieve sustainable development. Everyone here is in favour of sustainable development, but quite different conclusions have been reached, which is somewhat confusing to us.

This morning we've heard from various serious groups who feel that there are so many problems with this harmonization initiative that they want to see a stop put to it; they're not looking for improvements, they want it stopped. I asked them this question this morning, and one of my colleagues asked them the very same question. Is it only a question of means? If the provinces had more means, would you be in favour of this initiative? in answering these questions, they were very clear: no. Consequently, this is not even a question about means. And yet, what these people want above all is better environment protection and a Canadian federation that operates more effectively with respect to these issues.

We heard a second opinion, namely, that given by Mr. Gallon and his organization, who say that they are in favour of the initiative.

[English]

We support harmonization. It will do much to help foster environmental enhancement. We need harmonization.

[Translation]

And yet, what is happening appears to create so many problems that they are recommending

[English]

that the federal government should not sign current harmonization agreements, not until these questions can be answered and dealt with properly.

[Translation]

He is not raising the red flag, but the yellow flag. He says that because of budget cutbacks, reduced means, etc., it is better not to sign it. But if we were to find answers to these questions, it would appear that we could proceed.

In addition, we have some very serious people from the Mining Association, people who through the Whitehorse Mining Initiative, were able to prove the seriousness of their work. When you take a look at all this, you can see that they are doing some very serious work. These are people who also endorse the ideal of sustainable development. There's also the work done by the Conseil patronal de l'environnement du Québec. This group also agrees with what is being done, without any reservations, without the need for further qualifications, without criticism.

Mr. Chairman, when presented with the same circumstances, some people say that we should be raising a yellow flag, while others say that it should be pink and still others say that it should be red. We must find a fourth colour or chose from one of these three colours. I would like to ask today's witnesses to discuss how they would resolve the dilemma we are facing. Should we invent a fourth colour or choose one of these colours? This is quite a broad question, but they have come here to advise us. This, therefore, is the time to ask this type of question.

[English]

Mr. Gary Gallon: That was a very good summary of the situation. From our perspective at the institute, it is to take some time, don't sign right away, try to address these issues.

These are different times for the federal government, a comeback time when we're not in the recession. We have the ability and the resources to review decisions we were moving down a very hard track on for the last two years.

If we, for example, devolved the responsibilities to Ontario...let me give you an example. They have reduced their beaches restoration funding by 97% from $12 million in 1995 to $400,000 this year. They have reduced 99%, all of their funding, for their department that deals with developing environmental programs and standards, from $51 million down to $500,000. These are all in the report. Their capital fund for environmental technologies has also been reduced from $72 million down to $500,000.

• 1705

So within the ministry there are some real difficulties in implementing and designing standards for harmonization in law. You should know this before you hand off federal powers to them. You should make sure you're able to get those powers back in the event that they are not gone forward with by the provinces.

The Chairman: Mr. Robinson.

Mr. Alan Robinson: In order to do business, we need to know the rules. We're much more interested in the outcome as a business community than we are necessarily in the process, or, as we are wont to say with the Government of Ontario, “Who does what?” “Who does what” is fine. That's why you're here, presumably, so that at the end of the day we can have a business outcome.

The harmonization has to provide clarity. It has to provide predictability. It has to provide reliability in the long term. Business is very adaptable in this country to what the rules are. It seems to me that the conclusions you're trying to reach here are determining what those rules should be.

I'm sure I speak for my colleagues well beyond this room in the greater business community when I say that a set of rules we can depend on, a process we can follow, is much more important to us than actually where it's vested or actually who has it, as long as it's clear and consistent. I think the outcome of that is more important than worrying, necessarily...although the integral nature of the process is such. But without the outcome, the process isn't as important.

The Chairman: Mr. Segsworth.

Mr. Walter Segsworth: Mr. Chairman, I would like to respond to the question as well. I would say to a certain extent, from our standpoint, we don't particularly care—subject to my peers correcting me—what system we end up with as long as we know what the system is before and that it's predictable and that we have certainty, as was described by my colleague.

For the mining industry, our choices are not what kind of product to go into marketing in this country. Our choices are where to find our next mine. Canadian companies have been taking our acknowledged, good, superior technology overseas in legions in the last few years. I for one, coming from a family where I'm the third generation involved in mining, think that's a real loss for my country. I want to see responsible mining carried on in Canada.

So I say to this committee, let's not fiddle while Rome burns. Let's get a set of regulations, a system by which we permit mining operations in Canada that is predictable and that we can understand to try to attract those investment dollars back into our country.

The whole world is watching with bated breath right now the outcome of the Voisey's Bay permitting. There are two things going on. Of course, there's the aboriginal land claims overprinting the environmental process, but if that huge project cannot achieve a satisfactory solution in a timely fashion, the appetite for investment in this country will become even worse from the standpoint of our industry.

So whatever the result is, please get on with it. Make it so that we understand what it is and so that it's an efficient process.

The Chairman: Thank you.

[Translation]

Mr. Cloghesy.

Mr. Michael Cloghesy: Fundamentally, there is a perception problem, particularly with respect to the green group, which believes that the intent is really to have the federal government hand over or even abandon its powers to the provinces. I would say that this is not what we want. Rather, we are seeking a way to harmonize, to coordinate efforts with the federal government to make the system as effective as possible. It is not about the federal government abandoning its environmental powers.

• 1710

The Supreme Court of Canada has just announced that the federal government can intervene in all areas that have an impact on the environment. Accordingly, there is no question of that happening.

But why this misconception? In the past, there have been times when the provinces have perhaps really not acted in a responsible fashion. This depends on your point of view and we are always rehashing these particular circumstances. Therefore, the myth persists: provinces are irresponsible in environmental matters and only the federal government should get involved in this field. In my opinion, this is a myth and we must remember that things have changed tremendously over the past five to ten years.

This is not about transferring powers from the federal government to the provinces. Quite the opposite, this is about sitting down with the provinces and establishing an effective system which will provide us with clear and specific rules in this area. This is the only thing that we are looking for, and I believe that the provinces are in complete agreement with this.

[English]

The Chairman: Mr. Herron.

Mr. John Herron (Fundy—Royal, PC): I have two questions. One I'll direct to the mining group.

It's pretty much a given today that because we are in fact coming out of a recession, the environment has fallen off the table as a topic, as an issue, over the last five to six years in particular. Since there's more appetite for environmental issues, the public is going to be asking various levels of government to put more initiatives, more capacity, into maintaining our environment. That said, I also understand as a taxpayer that there isn't an appetite for any more taxation.

I preface this comment by saying that if I were a shareholder in a mining company and if I knew the provinces would be responsible for inspection and perhaps ultimately enforcement of environmental initiatives, without being handed any kind of capacity in this arrangement to actually implement this sort of inspection, enforcement, etc., I'd be very fearful about the royalty component of it. Will the provinces have to increase royalties from the mining perspective in order to ensure that they can recoup some more funding to actually maintain some of the environmental issues of it? Do you follow where I'm headed with that?

Mr. Leonard Surges: Absolutely. Thank you.

Yes, that possibility has occurred to us, but as I indicated before, we are confident that at the end of the day the total costs will be lower. There is only one taxpayer, and we pay to both levels of government, obviously.

As well, we've pointed out in many fora that if there are savings to the federal government, they ought to be shared in some equitable manner to the extent that a province takes on additional work. The provincial taxpayer shouldn't bear the burden.

The last thing I would point out is that our industry, as you say, does contribute to the provincial economies in a variety of ways, so before considering a royalty regime that would be uncompetitive, frankly, the provinces should consider the impact on the industry.

Do I have some concern? Yes. But we have some confidence as well, particularly as we see provinces as well as the federal government addressing their fiscal concerns, that perhaps the worst is behind us.

Mr. John Herron: Thank you.

Mr. Walter Segsworth: May I add to what he said, please?

Mr. John Herron: Sure.

Mr. Walter Segsworth: The great preponderance of our costs right now is borne by us anyway. In other words, we do all our own water sampling, aside from spot samples that government inspectors may take. All of the routine sampling, the high-cost stuff, is done by the mining companies. They're all submitted by us anyway.

I don't see that if there's a different regulatory regime, that cost will increase or decrease. You still need to do the same things. You still need to test your effluents and know what they are. Again, outside of spot-checking by whatever regime it is that is monitoring you, there's not a lot of regulatory cost there.

• 1715

Mr. John Herron: I'm glad he did interject.

The Chairman: Mr. Gallon, would you like to intervene?

Mr. Gary Gallon: Yes. The question on the financing, where the money comes from, is very important as budgets are cut. This was raised in the Plastimet plastics fire in Hamilton, where the budgets of the west central region in Hamilton were cut by over $400,000. There were fewer inspectors and less enforcement, and then the fire broke out.

Who's cleaning up the fire? The Government of Ontario. Cost? It ranges between $1.4 million and $2.4 million. So by saving money on the cutbacks, they are now spending more money on the environmental hazards that occur as a result of the cutbacks, and this is coming out of the taxpayers' pockets.

There is a backlash aspect to the financing here that we have to take into account.

Mr. John Herron: Just to interject, I'm glad that the other gentleman actually added to that conversation.

I'm a bit of a pragmatist when it comes to politics and money things. I would be very apprehensive—I'm not speaking on behalf of you—about the situation. I don't think that the federal government is going to be offering any large amounts of money to the provinces when it comes to a capacity perspective, which was your initial comment—which would make sense. If they are going to ask the provinces to do some of these things, then they should actually hand over some of the money to do it. At the end of the day, I'm apprehensive about that not happening.

If industries pertaining to mining or resource industries contribute most of the cost already—I'm just looking at it from a taxation perspective—they're going to say “Listen, we need to enhance our environmental budgets. Where are we going to get it from? We'll probably take it from resource-based industries, from those royalties”. I sense that being vulnerable.

I guess that's more a comment. Would you like to add to that in particular?

Mr. Walter Segsworth: I don't feel that vulnerability myself.

Mr. John Herron: No?

Mr. Walter Segsworth: As Leonard says, they have to be competitive.

From the mining industry's standpoint, the world is one. All regimes have to be tax competitive, they have to be regulation competitive, and no provincial government is going to put itself totally out of the running—although arguably some have now, and they're reaping the rewards. One of those is British Columbia.

Mr. John Herron: That's what it comes down to, the capacity issues, that some provinces may not necessarily have the economic means to ensure that they can actually get the job done from an environmental perspective. That makes it worrisome for some individual to say that in order to be competitive.... Since they don't have the capacity internally because of their own provincial economies, what they ultimately end up having to do is lower their own provincial standards. That's something I would be a little bit concerned about.

Ms. Aileen Carroll: I guess this is just for clarification.

I asked about harmonization. I'm beginning to realize that there are as many different understandings of that word as there are people around any given table at any time. So obviously I would hold harmonization of any legislation that exists in a shared way in a federal system, as we have, as a goal that we should all be aiming for. Those of us who want to have a climate of certainty and known expectations in which to operate our businesses want to know that there is one set of rules or at least a set of rules that is understood by all levels and able to be administered within that.

I didn't mean to mislead you when I asked my question. I too share a desire to have that, but I also share a desire to have an environment that is sustained by all of us that would participate at all levels of government and business in the private sector in making sure that this country meets the objectives it set out to meet and also is a country we all want to live in and have our children live in. Somehow we have to come to terms with that.

My concern, as my colleague has pointed out, is that we are hearing complete variance, from one end of the spectrum to another, as far as submissions are concerned. Certainly we are hearing that what we're going to have as a result of this particular attempt at harmonization is an administrative group of 13 participants for whom the lowest common denominator most likely will be the only attainable level, because we have an ability on the part of each of the participants—and please, Mr. Chair, correct me at any time if I'm wrong—to veto. So how will we as business people or we as citizens or consumers be happy when we're trying to cope with a body that any one member can veto? How will we anticipate? I'm really struggling with this, and I don't mind sharing that struggle with you.

• 1720

Mr. George Miller: Could I offer a slightly different perspective? First of all, I think it's misleading for you to be told that harmonization equals devolution. It does not—period. That's a misleading statement.

Secondly, if you look at the fiscal constraints, they are, if you like, exogenous to this issue. They are being imposed by governments for reasons of fiscal prudence, and they are going to stick for awhile. So in a situation of fiscal constraint, does it not make more sense to do priority things efficiently rather than inefficiently—

Ms. Aileen Carroll: By sharing—

Mr. George Miller: —by sharing and by deciding jointly what the standards have to be, and then getting on with the most efficient way of supervising, inspecting...?

Remember also that we have new tools. We have the NPRI, the National Pollutant Release Inventory. Every sizeable production facility in the country is now releasing publicly its emissions of 176 noxious materials, materials that are dangerous to the environment. That itself is a powerful incentive for the self-regulation of industry, for the reduction of those emissions on a continual basis.

One of the documents I handed you deals with the voluntary reduction by some 70% of the total emissions of these troublesome substances by the mining industry on a voluntary basis over seven years. I think Mr. Gallon referred to voluntary initiatives as a problem.

I remember Churchill's famous suggestion when he was told that Hitler would wring England's neck like a chicken, and he said, “Some chicken, some neck, some problem”.

What's the problem with a 70% voluntary reduction of these emissions? There are mechanisms in place that will avoid the Canadian environment being dragged down to the lowest common denominator.

The Chairman: Mr. Surges, Mr. Cloghesy and Mr. Gallon.

Mr. Leonard Surges: Thank you, Mr. Chairman. Following on that question, I can't offer any insights into the reasons why there's such discord, in fact, on harmonization. But I'd like to make one other observation, that in my experience both in the Whitehorse Mining Initiative in AQUAMIN, to which we referred previously, and in other multi-stakeholder processes, it has been a fact than when we get representatives of many of these same organizations, including our own, including provinces, including first nations, labour, federal departments and the environmental community to deal with a more concrete problem, then in fact we have found the common ground and proposed solutions.

I don't know how we can take that and build on it at a more general level, but I think I do have confidence in those processes. We do look forward, in fact, to the response of the minister on several of these multi-stakeholder initiatives where those accommodations have been made and there has been a very strong consensus forged amongst the various stakeholders.

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The Chairman: Thank you.

Monsieur Cloghesy, s'il vous plaît.

Mr. Michael Cloghesy: I'd just like to pick up on your comments with regard to one out of thirteen. I think it would be really inaccurate to portray the federal government as being one out of thirteen. It is one out of thirteen in CCME, but when we're talking harmonization it is the federal government and the provinces.

Quite frankly, the federal government, as stated in the recent Supreme Court case, can get involved in any environmental issue across the country. It really cannot be compared as one to thirteen. It is in a unique role and will always be in that unique role. I wouldn't worry about this one to thirteen, because this is a false analogy that really serves to cause confusion on this issue.

The federal government has the power to get involved in any environmental issue when it wants, at any time. The Supreme Court has just upheld that and that's the way the Constitution is. Unless we change the Constitution that's the way it will remain. The federal government has and will retain those powers, so I really think when you talk about one to thirteen you mustn't really refer to the powers of the federal government, because they would remain unchanged.

The Chairman: Mr. Gallon.

Mr. Gary Gallon: Regarding ARET and the voluntary initiatives, the mining industry has done a very good job in voluntarily reducing its emissions, but the ARET program in our study, which you now have, shows the problems. First, it set its base year too early. For a 1994 program, it allowed companies to come in and pick 1988 as the year from which cuts are done instead of starting the program in 1994 and saying let's get on with cutting. They've already made the cuts all the way back historically.

Second, there is lack of verification of the alleged cuts. Third, it used regulations that drove cuts and called them voluntary. An example is Inco in Sudbury. In 1985 I, with the minister and the Ministry of the Environment in Ontario, established new regulations—Countdown Acid Rain—for reducing sulphur dioxide emissions from Inco, Ontario Hydro and others. It fought that at first, but then joined on and developed new technology to meet the eight-year regulation. Yet Inco has shown that to be a voluntary initiative in its report to ARET. It wasn't voluntary, it was regulated, and had it not been regulated it would not have occurred.

The Ontario government, under its Countdown Acid Rain regulations incidentally caught a number of the pollutants that were also reduced that are on the ARET list of pollutants. Those pollutants were reduced as a result of that regulation. So you can't count regulated cuts as voluntary cuts, especially when they're eight years old.

The Chairman: Yes, a very short intervention or otherwise we'll never conclude.

Mr. Leonard Surges: Thank you, Mr. Chairman.

I have no doubt that voluntary approaches would warrant an extended discussion. Let me just say we don't deny there's a role for regulations or that they played a role in this case.

The fact is that reductions in releases of nickel to the present time from our sector have been about 60% since the base year of 1988, as Mr. Gallon points out, and our industry has already committed—again, through a multi-stakeholder process—to further reductions to and beyond 2008.

We think the baseline on the specific target, while important, is less important than the direction and the commitment on our part and others to continual reductions in releases. We may not always agree on the target, but I think we can agree on the direction.

The Chairman: Thank you, Mr. Surges.

To conclude the second round, Mr. Knutson, followed by Mrs. Kraft Sloan, and then we'll adjourn.

Mr. Gar Knutson: On one hand you're saying the mining industry cut emissions by 70% and you used the term “voluntary”, but Mr. Gallon is saying it wasn't voluntary at all and was being driven by regulations that were either in place or that you knew were coming down the pipe.

To me, there shouldn't be ambiguity on this. Either it was voluntary or it was driven by the impact of legal enforcement. Which was it?

Mr. Leonard Surges: We're all aware of the focus on SO₂ emission reductions in eastern Canada, but if you were to look, for example, at Cominco's Trail smelter, you'd see exactly the same sorts of reductions. It's not as a result of the Government of Ontario or, for that matter, B.C. addressing acid rain.

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If you looked at the operations in Manitoba, you'd see the same thing. You could go to New Brunswick. Did the regulations play a role? Absolutely. Was it purely voluntary? In fact, even the targets and the base here are not purely voluntary; they were negotiated. The targets out to and beyond the year 2008 have also been negotiated. But the fact at the end of the day is that reductions have happened as a result of those regulations, but more importantly, they've continued to be made since those regulations came into force.

Mr. Gar Knutson: You seem to have a new term in play, then, “purely voluntary” as opposed to “voluntary”—

A voice: As opposed to “compulsorily voluntary”.

Mr. George Miller: I think it's clear that the actual reductions go far beyond the requirements of regulation.

Mr. Gar Knutson: I applaud you for that. I'll come back to voluntary on another occasion.

The Chairman: We're getting away from our subject matter right now, so can you focus on our assignment, please?

Mr. Gar Knutson: You've made a sort of bald statement. We're not devolving powers. If the federal government lays off all its inspectors and says it will let the province inspect both for provincial government rules and federal government rules, which they tried to do with fisheries in Ontario until the provincial government said they weren't going to do this any more unless they were paid, is that a devolution of authority as far as you are concerned?

Mr. George Miller: There are many components in environmental protection, and inspection is one of them. Environmental assessment is another. One level may be moved down and another level may be moved up. The point we're making is that a rationalization is appropriate and, in total, this does not represent a devolution.

Mr. Gar Knutson: Let's say today we sign the agreement and the federal government lays off all its inspectors. Three years down the road some other provincial government gets elected and they cut their inspection in half. Is that a rationalization or is that an unintended consequence of the agreement? I think you would be hard pressed to convince the general public that the environment is better off for those kind of cuts and yet you're suggesting we sign a harmonization agreement with a government that seems to be making those kind of cuts in the province of Ontario.

Mr. George Miller: My reading of the proposed harmonization agreements says that they provide for oversight and for accountability in such a case.

Mr. Michael Cloghesy: I'm obviously going to have to support Dr. Miller's comments. Governments can do what they want. They have budgets and they can decide to chop here and add there, and they will be responsible to their voters. It's a decision of the government to do whatever it wants to do.

You're bringing out a hypothetical case here. I don't think the Canadian public would support this, quite frankly. I think a government that would initiate such cuts would pay the consequences, because recent surveys have indicated clearly that Canadians don't want any relaxation of measures to ensure environmental quality. So I think a government that would initiate such cuts in these areas would certainly be in trouble.

The Chairman: Very briefly, please.

Mr. Larry Dworkin: I just want to make sure that when we're talking about harmonization we're also talking about the same thing. For example, the application in the manufacturing sector perhaps, as opposed to where you've been leading—we'll say the extractive industry—may be somewhat different. But one thing that occurs to me is that there's nothing exclusive about having harmonization and good environmental standards.

What I mean by that is that if all the provinces wanted to, if they really set their minds to it, what's holding them back from adopting the same standards, coast to coast, to provide the same level of protection that is necessary? What we're asking for is to allow us that opportunity, so that at least we know what we're doing, what our costs are going to be, because this other system is absolutely ludicrous.

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You have to appreciate that our packaging industry is not unused to regulations. Whatever goes on a package in terms of language is governed by the federal government, whether it has to do with food, whether it has to do with different types of substances. We're used to that. We just have to know it's going to be a standard. That's why we worked hard within NAFTA to get the same kind of language on a package so I can sell my product in Mexico or the United States. That's what we're asking for here.

There is no exclusivity between good environmental standards and the lack of harmonization. I think that's what we should be looking for here. I think what I'm hearing is almost as if they say, well, if the Province of Ontario does this or the Province of B.C. does that, they have to stand up to the voters somewhere along the line. But for us in industry, what we're trying to do is to get on with the job. But for gosh sake, let us use the same rules coast to coast.

The Chairman: Madame Kraft Sloan.

Mrs. Karen Kraft Sloan (York North, Lib.): It sounds as if you're making a very strong argument for federal intervention and involvement and authority in this area, and I really appreciate what you have to say. The problem I have is that you may not see this in this agreement, particularly when standards and inspection are going to be given to the level of government that is best located and situated, so it may exacerbate your problem.

But I want to go back to a presenter's earlier comment, about the role of the federal government and the ability of the federal government to intervene at any time. I think this is very important. If you take a look at article 6 under the harmonization accord—the general accord itself, which is under the subagreement section—it says that when a government has accepted obligations and is discharging a role, the other order of government shall not act in that role for a period of time as determined by the relevant subagreements.

If you look under standards, if you look under inspection and environmental assessment subagreements, it has phrases that are similar to this one under inspection. It says again that when a government has accepted obligations and is discharging a role, the other order of government shall not act in that role for the period of time as determined by the relevant implementation agreement. That means the federal government, if the authority has been granted, devolved, or whatever, to the provincial level, cannot intervene for a certain length of time. An earlier witness has suggested they would have to go through negotiations and finally they would maybe have to abrogate the agreement in order actually to intervene.

I'm just wondering if anybody has comments.

Mr. Alan Robinson: I think it's important to realize you're not contracting out. There's a certain sense of this, that somehow if you give someone else in your partnership legislative authority they are automatically going to carry it out in a way you have previously...or in a way you think you have negotiated with them. That has that feeling of contracting out.

I think it's fair to say from our perspective—and my colleagues and I travel this country all the time and are pretty well in touch with what goes on—that it's very much at the whim of the government and the stripe in power, jurisdiction by jurisdiction. I would suggest again, and more as an amicus curiae than as representing my industry when I say this, but as a former legislator myself, you had better make sure you have remedies built in, in case you think it doesn't go the way you think it should go.

We got caught in a good-faith exercise and we've been trying to maintain the spirit of that protocol. I don't want to beat the drum again, but we've maintained both the spirit and the intent of that protocol on our own, quite in isolation, as other people have dropped off from it. We don't have any remedies. We can't do other than to walk away ourselves, and that doesn't serve the purpose we entered into to begin with and the capital investments that were made by packaging manufacturers in support of the outcome of that agreement, the outcome of that protocol.

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My caution to you is that if you're not sure of the outcome, I can tell you—for sure—that you're not dealing in a contractual arrangement. If you're at all uncertain, you'd better be sure; you'd better look to your remedies before you get into the swamp.

Mrs. Karen Kraft Sloan: Okay. Thank you.

Mr. Gary Gallon: The federal government, if it signs a harmonization agreement.... There has been interest, as this thing evolves, from the provinces in continuing to ascribe powers that were federal.

For example, for international environment agreements being signed by the federal government—the Montreal Protocol on CFCs, the Biodiversity Convention—the provinces have asked to be at the table. They would like to be at the negotiating table on international environmental agreements. How far do we go down that slope? There is a role for the federal government to stand and say we have national issues; they are at least transboundary; they are international; and we have a power now and the right, in a harmonious type of way, to maintain these powers.

The federal power in the Federal Fisheries Act was used to help Tioxide in Quebec clean up. The threat of the Federal Fisheries Act with Environment Canada helped clean up Kronos. They did a $30 million voluntary clean-up with those joint efforts. Many times the provinces like to lay off on the federal government the political responsibility of being the heavy. Once you get closer to the ground of development, it is harder for the province to say no to a major new money development. This kind of federal role is very important to the provinces and shouldn't be lost.

Mrs. Karen Kraft Sloan: Perhaps what you're suggesting is that the best situated is the one that's farthest away—

Voices: Oh, oh.

Mrs. Karen Kraft Sloan: —politically speaking.

Mr. Leonard Surges: I think in fact the criteria to be considered in determining which government is best situated are articulated very clearly in item 3, under the heading of subagreements. I'd make the point, in fact, that the appropriate arrangement in one province may be quite different from that in another.

I don't think the arrangement in, say, Prince Edward Island, not because of its size but because of the nature of its economy, would necessarily be identical to that in British Columbia, Ontario or Quebec. So I think the capability, the capacity, the effectiveness and efficiency, all of these other considerations, are in fact very important in determining which government should assume a role.

I think there are some obvious examples where federal leadership is really called for. Our industry has quite consistently indicated that we think there are cases where national standards would be very helpful. I think what I'm hearing—correct me if I'm wrong, but as another industry saying much the same thing.... If my understanding is correct, what we're really talking about here is not so much an environment issue as a barrier to internal trade being wrapped up as something different.

Each of those initiatives has an environmental basis. They're each laudable in their intent, but the result at the end of the day of this fragmentation is much less than optimal.

Mrs. Karen Kraft Sloan: If I were a business leader in this country today I'd be very concerned, because I have consistently heard over and over again that business people are looking for certainty and consistency, the things you have been talking about on the panel. I don't think any of us can disagree with that, but if you get into a potential patchwork situation, then you can have a great deal of concern about that.

Mr. Leonard Surges: I think that's possible, but the key again is the criteria, the agreement to actually implement the accord. We're really talking about a number of bilaterals spelling out exactly which party is going to do what in a particular situation, whether or not resources will in fact change hands and so on.

Similarly, although national standards are important, I think there is a need for some guidance as to how they will be applied. We've had discussions about that in relation to fish habitat management and other issues that are very sensitive and very important in order to develop some confidence in any type of change in the administrative arrangements.

Mrs. Karen Kraft Sloan: In the subagreement on environmental assessment the trigger is land, ownership of land. So those other things are less important.

Mr. Leonard Surges: That's certainly the key one, no question, but remember, that doesn't mean that the federal decision-makers will not make a decision of the day. In the context of environmental assessment, all it's saying is that there will be one process that meets the needs of both federal and provincial decision-makers. At the end of the day they may disagree, but at least they'll be dealing with the same information base and they'll reach the point where politicians are in a position to decide what's best in a more efficient manner.

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Mrs. Karen Kraft Sloan: The information base, as specified under the environmental assessment subagreement, is different. The requirement is different from what it is under the Canadian Environmental Assessment Act.

Mr. Leonard Surges: I think it would be an impossible task, frankly, to draft a subagreement that is identical to CEAA and also to each of the provincial regimes. The main elements are there, and at the end of the day it's very clear that the process in fact has to meet the needs of CEAA, just as much as it needs to meet the needs of the provinces, but the process may be somewhat different.

The Chairman: Thank you, Mr. Surges.

Mr. Cloghesy.

Mr. Michael Cloghesy: This accord and the subagreements are an attempt to see if we can work more cooperatively together between federal and provincial governments. They are very general in wording, and certainly it's a negotiation. Is the federal government going to get into an agreement on a certain aspect? If they have confidence in the provincial jurisdiction, are they going to in effect allow the provincial jurisdiction to take the lead in a certain area? If they feel they don't have the resources or whatever, then the federal government doesn't have to get into this kind of agreement.

These agreements, as has been mentioned, will be reviewed periodically. It's really an attempt to work more cooperatively together. I don't know if you see it differently, but that's the way I see it.

Ms. Aileen Carroll: The apparatus has to be in place so that if it's a federal response, we hear it at 1.10 p.m. on Monday and not six months later, or else the result of this will be being bureaucratized to death. It will be worse.

The Chairman: It's almost 6 o'clock and we have to bring to an end this very interesting afternoon. We certainly have heard a variety of very useful interventions, and the submissions have also been very helpful to us.

I would like only to comment that if we were talking about barriers to internal trade—and we were, perhaps, at times—then this is probably not the right forum, particularly for the manufacturing industry. The place to raise this matter, of course, is at premiers conferences or joint conferences of the prime minister and premiers.

I'm sure we're all aware of the fact that on more than one occasion the federal government has made considerable efforts towards the reduction of trade barriers. We have today in Canada larger and higher trade barriers east-west than north-south. It is an anachronism and a situation that is very hard to explain to anyone else visiting our country. It is a very important item and it's good that you are reminding us of this issue, but it is an issue that has to be resolved in another room and at another table.

As to the meaning of harmonization, I tend to agree with Mr. Miller that it does not equal devolution, or at least it should not equal devolution. Also, the tendency is to believe it will end up in a form of devolution. But it could also mean fragmentation, or it could mean reaching the lowest common denominator for the sake of peace in the family.

Therefore, at this stage, on the second day of our hearings, all your chair can say in concluding is that harmonization must mean something—which is a very profound thought, I admit—

Some hon. members: Oh, oh.

The Chairman: —but it must mean something in the public interest, hopefully, which then includes everybody in society.

We still have to define it. This is the task and the challenge before this committee, and I hope that by the time we write our report, we will be able to do so. If we fail, then we will have to leave it to greater minds than the collective minds around this table, which would be a terrible admission, wouldn't it?

Thank you very much for your help.

We will meet again tomorrow afternoon at 3.30.