NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 16, 2000

• 1856

[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): Ladies and gentlemen, I'm going to call the meeting to order. I see that we have a quorum already at the table.

Gentlemen, I welcome you to our hearings on Bill C-11. For the purposes of the record, let me just read the order of the day: Bill C-11, An Act to authorize the divestiture of the assets of, and to dissolve, the Cape Breton Development Corporation, to amend the Cape Breton Development Corporation Act and to make consequential amendments to other Acts.

We have a little bit of a round table, and I say that because there's a similarity, at least of background, to the witnesses present this evening.

We have the United Mine Workers of America, represented by Stephen Drake, president, district 26.

Welcome, sir.

Mr. Stephen J. Drake (President, District 26, United Mineworkers of America): Thank you.

The Chair: We have the Canadian Union of Public Employees, represented by Mr. Leo Gracie, vice-president, local 2046.

Welcome to you as well.

Mr. Leo Gracie (Vice-president, Local 2046, Canadian Union of Public Employees): Thank you.

The Chair: We have the International Association of Machinists and Aerospace Workers in Canada, represented by Mr. Ricky Wiseman, general chairman, local 684.

Welcome, Mr. Wiseman.

Mr. Ricky Wiseman (General Chairman, Local 684, International Association of Machinists and Aerospace Workers in Canada): Thank you.

The Chair: We have the Canadian Auto Workers Union, represented by Mr. Kenneth Greene, who's the vice-president, local 4504.

Gentlemen, welcome to our hearing. We look forward to hearing your testimony.

I'm not sure whether you've had an opportunity to present a brief. If you have, fine. If it's in two official languages, we'll distribute it very quickly. If it's not, we'll put it over to one side and members can avail themselves of those briefs as they will. We will then have the clerk and our translators do the appropriate translations so that when they are put on the record they will be in both official languages.

It is our custom, on this committee, to give all witnesses about 10 minutes to make a presentation, during which presentation witnesses will not be interrupted, except by the chair, and to then go into dialogue with members around the table.

• 1900

Ten minutes is the outside. We always prefer if it's little bit less because it gives more time to have questions from committee members who may want to probe some special issues; that's really the function of this kind of committee. So you can use that time, but if you use the time in giving a long speech like I'm giving right now, there's less time for questions.

That's the same thing that I'll say to members, and I'll say it now. We're going to have five minutes at a time. If members use a long preamble, they'll eat into the answer time and the chair is not going to be as generous as he was this afternoon.

I'm not going to mention any names, Madam Dockrill.

Mrs. Michelle Dockrill (Bras d'Or—Cape Breton, NDP): You're just going to be fair, right, Mr. Chair?

The Chair: No, I'm not going to be fair. I wasn't fair last time; I'm not going to start a habit.

Okay, gentlemen. I don't know which one of you wants to go first. Do you want to go in reverse alphabetical order?

Mr. Ricky Wiseman: Actually, Mr. Chair, each union representative would like to make just a brief statement, and Mr. Drake has an encompassing presentation he'd like to make. We'd just like to spend maybe a minute or two focusing on one issue.

The Chair: Sure. I always prefer to start in reverse alphabetical order, for more or less obvious reasons, I think.

Mr. Ricky Wiseman: I'm pretty close to it.

The Chair: Yes, that's it. I was really glad to see guys with a “W” in my class, let me tell you. Go ahead. You're first, Mr. Wiseman.

Mr. Ricky Wiseman: I'll let Mr. Gracie from CUPE go first.

Mr. Leo Gracie: Good evening, committee members.

I'm vice-president of CUPE local 2046. On behalf of CUPE local 2046, I would like to thank the committee for the invitation to speak at these hearings.

First of all, CUPE is not in favour of any changes to the Devco act that will leave those employees left in the coal industry without any recourse or protection for future downsizing in the coal industry.

Although Devco and the federal government made announcements that 519 jobs exist in the new industry, they will not give, in writing, a guarantee that these jobs will be there for the long term. Therefore, the people left in the new industry will have no protection, and it will take the federal government off the hook.

Mr. Chairman, that's basically how CUPE feels. At this time, I would like to allot the remainder of my time to Mr. Steve Drake, who has a formal presentation that will address the remaining concerns of the CUPE members employed at Devco.

Thank you very much.

The Chair: Go ahead, Rick.

Mr. Ricky Wiseman: I'm general chairman for the International Association of Machinists and Aerospace Workers. I'd like to thank you for the opportunity of being here. In the interests of brevity and the time constraints that you've imposed on us, I'd like to cut right to the chase.

One of the issues I want to deal with is the intent of the initial Devco act. I have read the minutes myself, as I'm sure you have—like the debate on the parliamentary issue—so I think you'll understand that it was a unilateral agreement by all three parties at the time and that it was in the interests of the federal government and in the interests of Cape Breton Island that this act be enacted.

At the time it was enacted, as I'm sure you'll agree, it was an enlightened and far-reaching piece of legislation with—

The Chair: Depending on which party was in power, you know, but—

Mr. Ricky Wiseman: Pardon me?

I believe you're from that party.

Is he from that party?

A voice: Yes, he is.

Mr. Ricky Wiseman: Anyway, we'll get to that in a minute.

The Chair: You don't have to set the stage—

Mr. Ricky Wiseman: You jumped.

Some hon. members: Oh, oh!

Mr. Ricky Wiseman: At the time, the act was put in place as a means of protection for the workers of an economically deprived area who had provided an invaluable service to the rest of Canada in times of dire need. The intent of the act wasn't just in its language; there was a specific intent when they enacted this.

I don't think I need a quote from Prime Minister Pearson or from Mr. Pepin's statement on the debate over this act to make you realize the intent of it, as I'm sure you're all familiar with the debate.

If you're not, then obviously you shouldn't be on this committee and, as opposed to Cape Breton miners being a burden to the taxpayer, you're a burden to the taxpayer if you're not familiar with the debate over this and the intent of the act. That's my point.

• 1905

Any changes or amendments to subsection 17(4) would be, in my opinion, a dereliction of your duty and, in fact, a slap in the face to the forefathers who had the foresight and the integrity to enact such an important piece of legislation.

It's important that you do not treat this lightly. You've been empanelled to deal with the issue and it's important that you don't treat this lightly. This was something that a lot of thought went into, and obviously a lot of importance was placed on it because of the area that we come from. It's important that you treat this with the seriousness that it deserves.

I don't want to take up much time, because Steve has a big presentation, but one other issue I'd like to address is the ramification of changing this act in regard to people who contribute to a pension plan. I don't know if you are all members of the Public Service Superannuation Act, but we have members in Cape Breton Development Corporation that are part of it. There's a part of this act that says if you're not in the government's employ at the age of 50, your benefits are reduced by 50%. The Liberal government, in its wisdom, saw fit to enact a piece of legislation where they could grab the surplus out of this Public Service Superannuation Act.

The point I'm trying to get to is that we have people who've spent 20-plus years underground—and more—contributing to a pension plan, with the intent of retiring with a bit of dignity and a bit of security. The government saw fit to draw on their surplus, but they imposed the limitation that if they're not in the government's employ at the age of 50, the government will reduce that benefit by 50%.

There's also another issue. I wrote to the Treasury Board on this and haven't had a response—I'm not sure if anybody here belongs to Treasury Board. There's also the issue that they put in place a waiver of reductions for people from deprived areas or people that are downsizing, whereby they would waive the restrictions to a certain age. I wrote to the Treasury Board Secretariat and got the response that the window of opportunity is closed. If anything cries out for a window of opportunity for a waiver of reductions, this situation calls out for it. I would just like the committee to give that consideration. I think it's a special need for a special place.

I think I'll leave that until you get to questions. I'll cede the rest of my time, if there's any—I don't think I took that long—to Mr. Drake.

The Chair: Mr. Greene.

Mr. Kenneth Greene (Vice-president, Local 4504, Canadian Auto Workers Union): Mr. Chairman and committee members, thank you for giving me the opportunity to appear here today.

I'm vice-president of local 4504, Canadian Auto Workers, and I represent the local at this proceeding.

Canadian Auto Workers Local 4504 and the national office of my union take issue with the section of Bill C-11 that deals with commencement of legal proceedings. Subsections 3(1) and 3(2) use words such as “action”, “suit”, “other legal proceedings”, “obligation”, and “liability”. These legal issues are referred to Her Majesty's court “in like manner and to the same extent as it could have been continued by or against the Corporation”.

It is the opinion of Canadian Auto Workers Local 4504 and our national office that for legal clarity and fairness this section should include, in text, the wordings “arbitration process” and “tribunal actions”. These points are the primary legal avenues of unionized labour groups. To exclude these items from Bill C-11 would be a violation of workers' rights under the labour code.

The CAW also feels that this bill is premature and should have been delayed pending the result of the arbitration now in progress.

Thank you, Mr. Chairman. I would also like to cede the rest of my time to Mr. Drake.

The Chair: Okay, Mr. Drake. Everyone wants you to speak on their behalf.

Mr. Steve Drake: Thank you very much. We had that planned.

I'm the president of the United Mine Workers of America District 26. That's in Nova Scotia and New Brunswick.

I was here earlier today listening to Minister Goodale and to Mr. Shannon, the chairman of Devco's board of directors. They made some statements that I believe fly in the face of logic and common sense.

We're talking about Bill C-11 here and the changes that are going to be made, which we think are going to impact heavily on the people we represent back home. Mr. Goodale brushed by the bill and basically said the impact is just housekeeping. We have to go through some housekeeping issues, is what Minister Goodale said.

I'll tell you right here and now that's the farthest thing from the truth I ever heard in my life. Section 17 and section 18 of the Cape Breton Development Corporation Act are far-ranging, very broad, and very powerful with respect to looking after the employees over the long term.

• 1910

Sections 17 and 18 were referred to in a policy statement by the Prime Minister of Canada, Lester B. Pearson, on December 29, 1966. I'll read from it, if I may:

The federal government realizes that the Cape Breton coal problem is essentially a social one. It is because of its awareness of and concern for the well-being of individuals and their communities that the federal government is prepared to assist, on a massive scale, the transition of the area from dependence on a declining natural resource to a sound economic base....

He goes on to say, further on in the document, that consequently,

The Crown Corporation will be instructed to give full consideration to the need for orderly adjustment, including the implementation of a generous early—

The Chair: Excuse me, Mr. Drake. I wonder if you would just slow down a little. You're speaking just a little too fast for our interpreters.

Mr. Steve Drake: I can slow down as long as I get a little bit more time to finish off what I'd really like to say, if that's okay.

The Chair: Well, you'll have to trust my judgment on that.

Mr. Steve Drake: Okay.

The Chair: Really, if you have something that's worth hearing, we have to give them the time to—

Mr. Steve Drake: That's why we're here, Mr. Chairman.

The Chair: Right, but we have to give them the opportunity to be able to translate it so that all members can get that information.

Okay, Mr. Drake. I'm sorry. We come back to you.

Mr. Steve Drake: That's quite all right. It's understandable.

Now, back to the Prime Minister:

The rationalization of the mines will be related to the success in the introduction of new industries. The Crown Corporation will be instructed to give full consideration to the need for orderly adjustment, including the implementation of a generous early retirement plan for the miners...

as recommended by Dr. Donald.

Now what happened with respect to section 17 and section 18 of the act was that Devco had a mandate from the federal government, and that mandate was to do two things: one, diversify the economy in Cape Breton, and two, look after the workers.

In 1967 they took 6,500 people from Dosco, the private coal company, under the federal umbrella with Devco. In the 33 years that Devco has been in existence, they've employed approximately 9,000 people—and these numbers are from Devco's annual report, so they're quite accurate. With respect to section 17 and section 18 of the Cape Breton Development Corporation Act, the federal governments of Canada have provided retirement benefits for more than 7,500 people out of that total of 9,000. The people that are left are the people that are there today.

Minister Goodale said this morning that there would be 500 or so jobs. I cannot be definitive, is what he said. What we're looking at right now is an announcement by the federal government of 340 pensions, 650 severances, $68 million in economic development funding, and an $8,000 training allowance, which we believe, based on what Devco has done historically over the last 33 years, is inadequate and unjust.

What we have seen over the past 33 years with the corporation with respect to section 17.... I'm going to concentrate on sections 17 and 18 because Bill C-11 deletes them from the Cape Breton Development Corporation Act and, unlike Minister Goodale's statement that it is housekeeping, this is the meat and potatoes of the Cape Breton Development Corporation Act with respect to people.

In 1974, the corporation stopped the downsizing. They were supposed to downsize the industry and get out of coal mining by 1981. In 1974 they stopped that officially. Tom Kent, who was the president of the corporation at the time said, in a press release from the Cape Breton Development Corporation:

The Corporation and the unions are agreed that, in the unlikely event that some future change of circumstances should again necessitate a reduction in the workforce, pre-retirement leave would be restored. Also, a temporary PRL benefit would be paid if, because of special problems, any men have to be laid off beyond the duration of UIC benefits and vacation pay.

• 1915

So once again, even when the corporation was hiring, the mandate of the federal government in 1967 was kept. They said, “If something happens in the future, we're going to downsize by early retirement.” Devco's whole history shows that: every time Devco downsized, they downsized exclusively by early retirement. Almost never did Devco do what they did, what the announcement on January 28, 1999, led to. Devco did a 180° turnaround with that announcement, and we're saying that's unjust.

There was a statement by Minister Goodale—or Bob Lomas—on paragraph 17(4)(b). He said two things. One, he said that it was looked after in the collective agreement. I negotiated the collective agreement; it's not in our agreement. That agreement does not cover us if subsections 17(4) and 18(2) are taken out of the Cape Breton Development Corporation Act by Bill C-11.

It's not in the collective agreement. Minister Goodale made an error there; I don't know if it was made purposely or not, but that will be up to the committee to decide.

It's not in our collective agreement. This agreement doesn't guarantee anyone anything after Devco is privatized. It doesn't guarantee one job. It guarantees their successor rights there, but if that company doesn't employ 500 people, we won't have 500 people working.

The removal of the industrial development division—this is related to what Minister Goodale said—and its mandate for economic development in no way lessens government responsibility for the well-being of employees of the corporation. It is evident that paragraph 17(4)(b) intended to prevent the damages which will be or are currently being suffered by employees of the corporation. The repeal of section 17 from the act will permit the government to abdicate its legislative social responsibilities to the Devco employees who are not scheduled to receive early retirement benefits under the closure announcement of January 28, 1999. Without paragraph 17(4)(b), they have no protection.

The people we're talking about, the people that the federal government and Devco are trying to hive off or sell off to the new corporation, are the most senior employees. Those 500 or 519 imaginary positions with this new company are the most senior people who have ever worked for this corporation. They have more seniority than most of the 7,500 people who went before them with retirement benefits. There's no justifying that, as far as we're concerned. One of those people has 31 years of employment with the corporation.

The importance of paragraph 17(4)(b) and subsection 18(2) cannot be overstated here today. We believe that if this committee takes one recommendation, it should be the one to keep paragraph 17(4)(b) and subsection 18(2) in the Cape Breton Development Corporation Act to protect the employees.

Mr. Shannon and Minister Goodale spoke eloquently about five-year plans and how everything didn't work out for specific geological reasons. To the contrary, we've been dealing with Mr. Shannon and Mr. Goodale for several years now and, if I may, here's what Mr. Shannon said about the first five years from 1990 to 1995—all of these numbers are in these documents, by the way. He said that Devco had a five-year plan. It was approved by the federal government. It was the federal government's plan. Devco averaged, over that five-year period from 1990 to 1995, approximately $235 million in revenues every year. In 1993, they had a corporate high of $266 million in revenues.

Here's a statement from one of Devco's annual reports that I have here:

Corporate statements for the five-year period were indicative that the Corporation was following a long-range plan which would maintain or expand the customer base and export markets, capitalize on economies of scale, and evaluate expansion into the Donkin Mine.

That's what Devco wanted to do in 1995. In the 1995 annual report to Parliament, the president of the corporation, Ernie Boutilier, stated,

The program for self-sufficiency was extremely successful, and we are now positioned to operate without federal government subsidies.

• 1920

The government accepted that. It was a document that went to Parliament. The Treasury Board accepted that.

Now, with respect to the next five-year plan, the five-year plan that we believe is responsible for the collapse of the coal industry, the federal government accepted a plan that we felt was fatally flawed from day one. That's on the public record. It's in the Senate hearings; we went to the Senate hearings in 1996 and 1997. On April 12, 1995, Devco's president, Ernie Boutilier, stated the following:

Nova Scotia Power unilaterally imposed a coal price which does not cover Cape Breton Development Corporation's cost of production. Through this action, Nova Scotia Power has placed Cape Breton Development Corporation in a significantly compromised position. Cape Breton Development Corporation is without authority to borrow money from the private sector and must meet its entire financial requirements internally. Thus we are wholly dependent on sales revenue to meet ongoing expenditures, and therefore, if Nova Scotia power persists in its present course of action the Cape Breton Development Corporation will face a financial crisis before too long.

Because of that statement and because of unilateral price reductions, the Cape Breton Development Corporation started a legal action on April 18, 1995, in the Supreme Court of Nova Scotia. The key statement was that acceding to Nova Scotia Power's demand would fundamentally alter the business operations of the Cape Breton Development Corporation and would cause the Cape Breton Development Corporation to incur substantial closure costs.

So the first thing was that Devco couldn't meet its financial obligations; there would be a financial crisis. The second thing was that it would incur substantial closure costs if this legal action was unsuccessful and if Nova Scotia Power got the cut it was looking for.

In September 1995, the newly minted Devco board of directors and the Government of Canada approved that cut: we lost $30 million in revenue. That took our corporation right to its economic knees and fulfilled what the lawsuit was all about.

The new plan that the federal government then adopted was called “Beyond 2000”. Our people, all of our unions, called it a fatally flawed plan, and we lobbied against it. Resulting from some of that lobbying effort, a company by the name of John T. Boyd, a pre-eminent engineering company from the United States of America, built the plan for the Government of Canada at a cost of $500,000 in taxpayers' dollars. I'll just read an excerpt from the Boyd report. I have one of them right here, and I'll just pass them to the clerk, if I may.

The Boyd engineering study was conducted for the federal government, at a cost of $500,000, to assess the long-term viability of the Cape Breton coal industry. The Boyd team recommended a 34% workforce reduction, multiple entry development systems, roof bolting, and development of a strong corporate and colliery management structure. Boyd stated emphatically:

...although the submarine setting of the mining does create some unique constraints and there are occasional geologic anomalies, nothing at Prince or Phalen—

I'll repeat that: “nothing at Prince or Phalen”.

—precludes the operation of a modern, highly productive mine.

On a total cost basis, the Cape Breton Development Corporation would be profitable by 1999-2000, last fiscal year. The document that goes with that is at the back of our blue document here. It's the estimated production costs of a case 3 commercial potential for the Cape Breton Development Corporation, which neither Mr. Shannon nor Mr. Goodale mentioned this morning, for some reason.

At the very bottom of that document, in these very detailed calculations—these guys are the best in the world—there's a profit/loss line. If you look right across to the year 1999-2000, you'll see that despite the problems we had at Phalen colliery, despite the fact that we were five and a half miles or six miles under the Atlantic Ocean, despite the fact that we had some geologic anomalies, despite the fact that we had some rock outburst situations, a little bit of water problems and the roof control situation, despite all those things, the John T. Boyd company gave the Government of Canada the proper tools to put our industry back on its feet.

For 1999-2000 that plan showed the Government of Canada that we could make a profit, a projected profit of $26 million, then in 2000-2001, this particular year, $54 million in profit, and in the following year, $64 million in profit.

• 1925

So I would say to this committee that what Mr. Shannon and Mr. Goodale said this morning was highly irregular and highly inaccurate—and the federal government has this document on the public record.

Now if you looked at our—I'm not sure who has this document—page 14, you'll see that Devco, under the guidance of the present board of directors, went to the Senate hearings to defend their plan. When they went there, they put a whole bunch of numbers on the table and they said that in 1999-2000 “we're going to make a profit”. Mr. Shannon said, in this quote from the Senate hearings,

We had to build a plan which was conservative enough and believable enough for the people in Ottawa; it had to be achievable and supportable but yet aggressive enough to keep us in the coal mining business.

That's a quote from Joe Shannon. This was the five-year Beyond 2000 plan. He said it three or four times. Senator Ghitter stated,

I look at your statements as being based on unverified assumptions. I see no backup in any of the material that I have read up to this point in time. Am I missing something in this context, or are we going on a wing and a prayer here?

The United Mine Workers of America shared his obvious skepticism and urged the Government of Canada to appoint an independent watchdog to keep the corporation on track. We were worried that this plan would not work; we felt that it was fatally flawed from day one. The federal government response was very condescending. They didn't listen to us and they didn't give us the watchdog, and we're at a point today where that plan failed miserably.

The following results of Devco's plan are why we're here today. Devco had the tools, the federal government had the plan, and they had the people. We've been mining coal for 300 years and no one in the world does it any better than we do. The following results are from Devco annual reports, corporate documents, and corporate personnel who work for the corporation today, for the period 1996-2000, for which Devco made all these beautiful projections.

Revenue from coal sales: we had one year when revenues were $188 million. This year past, 1999-2000, Devco produced 638,000 tonnes of coal—that's it. That's from two coal mines. Phalen was operating and Prince was operating for part of that fiscal year: 638,000 tonnes. Now, that secret document from Nesbitt Burns that nobody is allowed to look at, the sale document, shows that in 1998-99 the average coal price that Devco got from Nova Scotia Power was $66.69 per tonne. If you multiply that $66.69 per tonne by the 638,000 tonnes that Devco produced last year, you'll get revenues for last year—minus any inventory that Devco might have had on the ground the previous year that they carried forward for whatever purposes they do that for—of $41.6 million, the worst performance by far in this corporation's history, $158 million off the projection that Devco made to the federal government, when they said, we are here tonight because we believe this plan will work. They said it to the Senate. They said, we believe that we will build a management team that can deliver on this plan.

They were $158 million dollars off target. If there's not something there that deserves the attention of this committee and deserves more than what I saw from Mr. Goodale and Mr. Shannon this morning, there's something wrong with what's going on here.

On the next page, page 15, you can see—I don't know if everybody has a copy of this—the revenue summary, and it's very clear. These revenues are what Devco is going to produce this year, in 1999-2000. It may be a little higher because of inventory that was on the ground, but from actual coal production, it's under $42 million. That's horrendous. We're Canadians. We did everything we could possibly do down there to keep this industry alive, including telling the federal government in 1995 and 1996 that this would not work.

Now it's okay to sit here and say, “those guys are crying in their soup”, and everything else, but something happened in this corporation that we believe deserves a public inquiry. We did everything we could possibly do. Unlike what they said here this morning, which was that there was no risk.... You go down and tell that to a miner—or his family—who is going down underground at Phalen colliery to recover those roof falls. Those roof falls were totally unnecessary, because the board report and established mining practice worldwide gave Devco the tools to stop those roof falls, to produce enough tonnage per year to be in a profitable position this year, next year, and the following year.

• 1930

We believe that what's going on right now with Bill C-11 can only be called an abolition of government responsibility. The government wants out, for no particular reason other than that they want out. Someone this morning asked, “Why such a rush?” I think it was the gentleman who is not here right now. He said, “Why is there such a rush to push this bill through?”

Why such a rush? I'll tell you why.

We're operating one coal mine right now, and this document right here, the strictly private and confidential sale document that Nesbitt Burns put together, shows, on page 68, a summary of financial forecast of operations. It shows for the years 2000, 2001, 2002, 2003, and 2004 that Prince Mine will produce 1.1 million to 1.2 million tonnes of coal. Now, last year, Prince Mine produced 468,000 tonnes of coal, and that was it: one-third of that. Devco is making projections here to a foreign company to come in and buy a coal mine that is going to produce projected tonnages of 1.2 million tonnes a year.

Now with 500 people working—and Mr. Shannon said this morning it's $50,000 per person—the labour cost is going to be incredible. If this mining operation has one blip, one thing that stops it from producing.... Prince Mine's maximum production design capacity is about 1.2 million tonnes, not 1.5 million tonnes like Mr. Shannon said this morning. If there is one blip, those imaginary 500 coal miners go on the street; they have no jobs. If they go on the street with no jobs and Bill C-11 goes through as it's going through, unchanged, unamended—

A voice: Unchallenged.

Mr. Steve Drake: —unchallenged, and sections 17 and 18 are no longer in the Devco act, those coal miners have no protection whatsoever.

I would challenge Mr. Shannon, Mr. Buchanan, Bob Lomas—who am I missing?—and Minister Goodale to find in our collective agreement or in any of our collective agreements where we have the protection that the 7,500 people had who went on early retirement over the past 33 years. We don't have it. As soon as that mine goes private, it doesn't matter if we have successor rights: we do not have the protection of the legislation.

The Chair: While you're catching your breath for a second, Mr. Drake, you would make available to the committee both the collective agreement plus that document that you were reading from...? Our research—

Mr. Steve Drake: I'll give you this. You can have this one.

The Chair: And the other one that you were reading from.

Mr. Peter Mancini (Sydney—Victoria, NDP): I think, Mr. Chairman, this is being—

The Chair: No—the secret document.

Mr. Steve Drake: Oh, the secret document...? I can't give you this one, but you can take a photocopy.

The Chair: That's what we mean when we say we want to have a copy. So you can give it to us, we'll get a copy—

Mr. Steve Drake: Is it okay for Michelle to provide it?

The Chair: No. We usually take it from those who provide us with the information as they come before the committee.

Mr. Steve Drake: Since I only have one.... I'll make sure that the committee does get one.

The Chair: It will get back to you if you give it to us. Unless you're going to refer to it now...?

Mr. Steve Drake: Oh, do you want to take this now?

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): On a point of order, Mr. Chairman—

Mr. Steve Drake: Actually, I need it for two more seconds.

The Chair: No problem.

Mr. St. Denis.

Mr. Brent St. Denis: On a point of order, the document in question is not really a document that is properly under the ownership of the witness, I believe. Isn't it a document that refers to the dealings between the corporation and potential buyers? In that case, I don't know what the procedure is in asking a witness to table a confidential document.

The Chair: Well, I'm not concerned about it, Mr. St. Denis. It's a good point that you make, but the witness has referred to a document that only he has. The other members around the table, save Madam Dockrill, don't appear to have an opportunity to refer to that document for further consideration, and it's the habit of this committee to receive as much information as possible and put it on the record. If Mr. Drake has it and it's a personal document that he doesn't want to share with anybody—

Mr. Steve Drake: I'll give you this one. I can get another one.

The Chair: —that's his business, but it's not his—

Mr. Steve Drake: Mr. Chairman, I'll give you this one.

Mrs. Michelle Dockrill: On a point of order, Mr. Chairman—

The Chair: The same point of order...?

Mr. Brent St. Denis: I think we're on potentially very dangerous ground here, Mr. Chair. I'm not sure.... Could I ask the witness whether he's privy to a confidentiality agreement relating to that document? Is he a signatory to...?

• 1935

It's sort of like.... I'm not suggesting.... I'm using an expression, and I want to be careful on the words I choose. If the goods in question were acquired by unofficial means and they are confidential between parties not at the table, are we not possibly on very dangerous ground in putting those documents...? Maybe we have immunity here, but I'm not sure if the witness does. I would think that we might want to be very careful with this. That's all.

The Chair: Before I answer that, I think you have a point of order, Madam Dockrill.

Mrs. Michelle Dockrill: My suggestion is that I think the committee should request this document from the minister, since it has to do with the sale of the corporation, which is right now at the board of directors and the minister in the federal government. I have to agree with Mr. St. Denis. I think the committee should request it from the minister.

Mr. Brent St. Denis: Mr. Chairman—

The Chair: Just a second.

Mr. Peter Mancini: Mr. Chairman, thank you for your indulgence.

I think it's most important and I think you're absolutely right that the committee members have a copy of the document, since it has been referred to. I'm not sure of the legalities of Mr. Drake providing it. I think we should do what we have to in ensuring that he's protected, but the committee certainly—and I stand to be corrected on this—has the power, I think, to have the minister table the document to committee members, which could avoid the problem here and ensure that the members of the committee who are ultimately charged with examining this have the relevant document.

The Chair: Thank you very much, Mr. Mancini.

I'm going to take the issue under advisement. The reason that I had some concerns at first, Mr. St. Denis, is that when a witness presents some information that only he or she has access to and the rest are deprived of the whole context, then.... The committee can only consider the information in its total context. That was the reason for me asking for a tabling of that document.

Now you're quite right, in my view, that if that document is the one referred to in another sitting of this committee as part of the confidentiality agreement, I think the chair and this committee would be well advised to act accordingly.

Mr. Drake referred at one specific point to page 68, so we certainly will take that page 68—I think we can take a copy of that—and we can refer to that. Then we'll deal with the rest of the issue as it comes along.

But your point as well is well taken, well made, Mr. Mancini.

Mr. Cardin, on the same point of order.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): You know that according to the committee's rules, documents must be in both official languages. I think that documents have been circulated. I know that I arrived late, but...

[English]

The Chair: I dealt with that already.

[Translation]

Mr. Serge Cardin: ... I assume they're only in English.

[English]

The Chair: I dealt with that already, Mr. Cardin—thank you very much—before you came in. We had the same problem the other day with a document that was only in French. It's an ongoing problem. I deal with it at the beginning of every sitting. You're absolutely right: there was no excuse when it wasn't prepared in French, and when it isn't prepared in English.... That's why that document is over to one side for members who want to access it. It's not distributed, as no document that is not in both official languages can be distributed at these committee hearings. Your point is well taken and I remind everybody all the time—but we dealt with it.

[Translation]

Mr. Serge Cardin: That's the same thing, Mr. Chairman.

[English]

The Chair: I understand.

[Translation]

Mr. Serge Cardin: [Editor's Note: Inaudible]

[English]

The Chair: I understand that, Mr. Cardin. As I say, we sometimes have the problem in the other official language. The best that I can do is to advise witnesses that the documentation, number one, cannot be distributed, and that, number two, it will not be distributed until our translators get through the document. In the meantime, members can have access to the document at their volition, not necessarily at the distribution of the committee.

Mr. Drake, I'm sorry we've taken a couple of minutes of your time. I'll give you that opportunity. Go ahead.

• 1940

Mr. Steve Drake: We have three expert studies; they're in the documentation.

The first one is a study that was conducted by Michael Gardner of Gardner Pinfold Consulting Economists Ltd., from Halifax. Mr. Gardner is very well respected. He's an economist. We asked Mr. Gardner to study the economic impact of what would happen because of the Devco closure. His findings include a drop of just under $1 billion in household income over the impact period, which is a 14-year period. It's based on a formula whereby miners would draw that early retirement incentive benefit over a 14-year period.

His findings include—I'll repeat that—a drop of just under $1 billion in household income over the impact period, based on the Phalen closure and the privatization of Prince, if that's successful. In the case of the closure of both collieries, household income drops by $1.5 billion over the impact period.

In this very detailed document, Mr. Gardner goes on to say,

Whether the economy is on the edge of a downward spiral is difficult to say. But the impending Devco closure, coupled with the possible closure of Sysco, would certainly contribute to such a prospect.

There's a very serious problem here. In 1995, the Cape Breton Development Corporation board of directors issued a public release saying that Devco's impact in direct and spinoff economic contributions in the province of Nova Scotia was $1 billion a year. The federal government, by approving Devco's plan, is removing that economic activity of $1 billion a year—$1.5 billion in household income out of the pockets of taxpaying Canadians over a 14-year period. They're replacing it with a fund of $68 million. That's $17 million a year.

I'm not a mathematician, but I can add. It doesn't make sense to us that the federal government would brush aside taking $1 billion out of an economy, saying that everything is going to be fine because they're going to give us $17 million. It doesn't make sense. There's an impending and huge economic crisis in Cape Breton Island, and only a public inquiry can get to the bottom of it and potentially stop it.

The second document is a document that was commissioned by the UMWA. It's an assessment by Dr. James Bickerton of the regional development aspects of the Devco closure. Dr. Bickerton is a professor of political science at St. Francis Xavier University. He's an expert in regional development.

As for the bottom line in Dr. Bickerton's document—I don't want to get into it because it's pretty long—he concludes that the measures announced by the government, the $68 million package, etc., do not offset the closure of Devco's coal operation. He summarizes his view and says:

First, the modest economic development fund that accompanies the pension and severance measures is clearly insufficient to offset the major economic impact of the announced mine closure on the local economy....

Secondly, past regional development measures did not achieve their goal of creating a new, more diversified economic base for Cape Breton as envisaged in section 17 of the Cape Breton Development Corporation Act.

Thirdly, evidence from comparable cases elsewhere in Canada suggests that the Government of Canada, in cooperation with provincial partners, has the capacity to significantly offset the economic impact of major industry closure.

Finally, it has been argued that the economic and technological changes associated with globalization open up opportunities and potentials for regions formerly handicapped by their distance from the centre of national economies. Regions such as Cape Breton can now hope to generate indigenous economic growth and development through their participation in an increasingly borderless global economy.

What we're saying is that even if you take away all the big numbers and just understand that there's a major amount of money coming out of the economy of Cape Breton Island.... We don't have to argue about $1 billion or $1.5 billion. We just have to know that it's a big number they're taking out and a small number they're putting back in. It would appear from the Gardner Pinfold study and the assessment by Dr. Bickerton that the $68 million fund for regional development that was included in the federal government's announcement is unlikely to have any significant impact on the economic opportunities for displaced coal workers on Cape Breton Island.

The third study we had is a larger document.

I apologize, because if you can believe it.... I know you wouldn't believe that we put all this together since Friday, when we got a call at 5 o'clock.

• 1945

The third study is done by Dr. Peter Warrian and Dr. Rick Williams. Dr. Warrian is an expert on downsizing and restructuring. Dr. Warrian is the gentleman who worked closely with Algoma Steel to do that project. Dr. Williams is an expert in regional development and works out of Halifax.

What they say is that there's

overwhelming evidence the Devco closure and the economic losses to miners and the community will have serious economic impacts on Cape Breton.

One of the studies we looked at was the very detailed longitudinal study done on Elliot Lake. I heard Mr. St. Denis speaking about it this morning. We know what happened to the coal miners in Elliot Lake. They were—

Mr. Brent St. Denis: Uranium.

Mrs. Michelle Dockrill: Gold.

Mr. Steve Drake: Sorry—the uranium, the gold...the miners. If they work underground, they're miners, and they're brothers—or sisters. For the miners in Elliot Lake, there was devastation. It's now a retirement community and it's a beautiful place; I saw the ads on TV. It's a beautiful place, but young people don't have a major place in the community. They leave. It's just the same thing that's happening in Cape Breton right now.

The miners in Elliot Lake were affected the same as the miners in England, the same as the miners in the Appalachian region in the United States. This document goes into detail. What it says is,

The way of life they have known for generations, the pervasiveness of specific health problems, their limited educational profile, the substantial psychological barriers to adjustment to other industries, their fears related to retraining and their resistance to relocation—these are characteristics one sees in coal-mining communities everywhere. This creates an environment that when mines do close, the problems of adjustment are formidable.

It's not an easy task that the federal government is asking coal miners to do back home. That's what Devco was designed to do in 1967—to alleviate this, to stop this. The two key pieces of that legislation are section 17 and section 18. Bill C-11 guts, destroys, section 17 and section 18. We don't have that protection if this bill goes through unchallenged and unchanged.

There's a lot more there, but Mr. Warrian and Mr. Williams, in their conclusion, say that there's overwhelming evidence that the current proposals from Devco and the Government of Canada are insufficient to avert widespread hardship, for both the displaced miners and the wider community.

The last thing I'd like to talk about is the privatization and what's going on with this privatization. This is privatization by stealth, as far as we're concerned. The employees are stakeholders in this, some of the most important stakeholders, and the employees know absolutely nothing about this. We don't know who the buyer is. We think it might be a company called Oxbow, from the United States. They were the only ones that came in seriously, that looked serious and kicked the tires—but we don't know. We don't know how many people are going to be there. The government, Minister Goodale, says there might be 500. Joe Shannon says there might be 520, but this collective agreement and the bill that gives us successor rights do not guarantee us 500 jobs. The bill doesn't guarantee us 250 jobs. It guarantees us successor rights and that's it.

Mr. Kenneth Greene: Oxbow says there's no commitment.

Mr. Steve Drake: If that company, Oxbow, which, as Kenny just reminded me, has said there's no commitment to number of jobs, comes in and says that due to the information we have in this secret document, due to the information we have here, they have to produce 1.2 million tonnes of coal from Cape Breton's only coal mine every year to make a profit but they can't afford it, and if the biggest cost is labour so they have to cut some jobs, what happens to those 500 guys? What happens if they only take 100? What happens to the extra 400? You know what happens...? They go on the street and the federal government will be able to wash their hands of it because they gutted section 17 and section 18.

Mr. Kenneth Greene: And those will be senior employees.

Mr. Steve Drake: With respect to the 500 people.... Mr. Chairman, I will hurry up; I know the end of my time is probably way overdue. I do apologize. This is very important. This is probably the last time we're going to be in Ottawa on this issue.

The Chair: Don't apologize. Take your shot.

Mr. Steve Drake: We believe that if the federal government is successful in doing what they're going to do and severs the 650 junior people and leaves the 500 senior people in the corporation, those 500 senior people, with an average age of somewhere around 46 or 47, with 24 years working underground or working in the industry, will be the people that go to this new corporation with no protection.

• 1950

Most of these people—and I know I've said this before and I'm repeating myself, but it's important—that the government is going to toss out the door to this new company, thank you very much, are senior people with more service than most of the 7,500 people who got pensions in the last 33 years because of the Devco act.

Now, in the Senate hearings in March 1996, Senator Allan J. MacEachen said—I can't speak as eloquently, but I can read what he says—and I'll quote him:

I must say...that unless the social equation is introduced into an examination of the current corporate plan of the Cape Breton Development Corporation, an important element in approaching the problem will have been overlooked. When the Cape Breton Development Corporation was organized and legislated, it was a move from privatization to public ownership because privatization was incapable of dealing with the community and social problems which would occur from a sudden cessation of production in the coal industry.

He was saying the same thing we're saying right now. He was saying the same thing we've said for the last five years: there's a problem in Cape Breton. The coal problem still exists and people don't want to address it. And you know what happens when people don't want to address issues like this? I remember what happened at Westray. Nobody wanted to listen to those coal miners until after it happened. I watched and I read every newspaper on the Somalia affair and nobody wanted to say “the responsibility's at the top, boys”. I watched the Avro Arrow show five times; I read the book twice. I know what happened there.

There are people at the top who are responsible for decisions here. Those decisions, based on the results of the last five years, can only be related to complete—complete—incompetence. Nothing that was done in the last five years goes anywhere near what are accepted practices in mining industries right across this country and in the United States and Australia. They totally walked away from accepted international mining principles and went helter-skelter down the road with a plan that wasn't going to work. They built their plan on quicksand and our people are suffering because of it.

The document that Ms. Dockrill read from this morning is a letter addressed to me from Minister Goodale on January 28, 1999. I got it the morning he made the announcement. We put a plan together and these are just some of the ideas. In 1996, we did our own little red book, Creating Opportunity, because we thought that the federal government might look at this and take it seriously. No one ever did. In it there were some mining ideas to make Devco a little more profitable; we did another one last year, just something small. These were dismissed.

But Minister Goodale.... When we put our plan together, it was based on accepted mining principles all over the world, and we knew it would work. One of the ideas was to mine the upper sections at Phalen colliery. Here's what Minister Goodale said to me in the letter:

Devco has considered the development of six blocks of coal in the upper section of the Phalen Mine identified in your proposal. Devco indicates that these blocks contain 5.2 million tonnes of technically recoverable coal. However, much of this coal has a high ash content and must be washed to meet the customer contract specs. Washing reduces the coal available for sale to about 4 million tonnes and carries a cost.

Then he goes on. What he says at the end is this:

Unfortunately, the analysis indicates that it is not economical to develop the upper sections of the mine.

Now, in the document from Nesbitt Burns, what it says about Phalen Mine, on page 19, is this:

Of note is the potential for mining the updip coal resources above 1 East....

Mr. Brent St. Denis: On a point of order, Mr. Chair—

Mr. Steve Drake: That's what I'm talking about here.

Mr. Brent St. Denis: On a point of order, Mr. Chair—

Mr. Steve Drake: I don't need to read it. I'll just tell you what it says, if I may.

Mr. Brent St. Denis: No.

On a point of order, Mr. Chair, I just want to say again for the record that the document being referred to, and either quoted from or précised, is a document that is part of a confidentiality agreement to which there are a number of signatories. I gather Mr. Drake is not, but the person or persons from whom Mr. Drake got that probably are signatories, so I would think that the confidentiality would extend to Mr. Drake as well. I just want it to be clear that the reference is to a document that is subject to a confidentiality agreement.

The Chair: Thank you.

Mr. Steve Drake: I won't refer to this any more, but—

The Chair: Thank you, Mr. Drake.

Mr. Steve Drake: —if I could finish what I was saying there...?

With respect to what Mr. Goodale said about this plan that we had for the upper sections of Phalen colliery, we have evidence and information now which indicates that those upper sections were completely viable, that the mine could have operated in those upper sections, and that the coal was of a consistent quality that was very marketable and highly desirable to power companies who would purchase that product.

• 1955

What we're saying, in effect, is that the Government of Canada endorsed the closure of a perfectly viable coal mine filled with a non-renewable natural resource, with more than 10 million tonnes in that upper section. They just shut it down, and it was viable. We think that's against the law. We don't think you're allowed to do that. Once again, we think that closure should be investigated. There should be a public inquiry into what happened at Devco before Bill C-11 is allowed to go to third reading.

The Chair: Mr. Drake, you're quite right: we're well over the time. I gather you have finished.

Mr. Steve Drake: If I could have two more minutes, I will be. If you would be so generous as to give me two more minutes, I will be finished.

The Chair: Okay, Mr. Drake. You have two minutes.

Mr. Steve Drake: Thank you.

We believe that the decisions which led to the financial and operational crisis at the Cape Breton Development Corporation were not in keeping with internationally accepted mining practices. The UMWA, the Devco unions, and the confidential employees submit that by not acting on employees' concerns, the government acted improperly in its exercise of its governmental discretion and breached the standard of care. As a result, members of our unions and Devco employees will suffer considerable damages. Bill C-11 will invoke privatization by force and employees will be left without the protection of sections 17 and 18 of the act.

We believe in and are calling on the Standing Committee on Natural Resources and Government Operations to recommend the following: number one, a comprehensive public investigation into the financial and operational crisis and subsequent push to privatization of the Cape Breton Development Corporation; number two, the retention of paragraph 17(4)(b) in the Devco act; and number three, the retention of subsection 18(2) in the Devco act.

In closing, by not acting on employees' concerns and by dismissing reasonable proposals for viable, ongoing operations, the government has shown its true hand. When the time comes for final judgment, this lack of action must be the real measure of the true intent of government. There are many unanswered questions in what can now be considered one of Canada's most tragic mining disasters, but one thing is certain: the Cape Breton coal problem still exists.

Thank you for your patience, Mr. Chairman and committee members.

The Chair: Thank you very much, Mr. Drake.

I dare say, on a personal basis, that it has been an exhaustive presentation; I'm not sure you left anything out.

I'm going to go to questions on the part of members, but I'm going to suspend for two minutes for those who need to do things that might be required before that.

Mr. Steve Drake: Thank you, Mr. Chairman.

• 1959

• 2004

The Chair: Gentlemen and ladies, the meeting is resumed.

I'm going directly to questions from Mr. David Chatters.

Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

Before I start, I'd like to express concern—and hope you would take it into consideration in your deliberations—about this secret document. I think it's unacceptable that some of our committee members have access to that document and others don't. If some of our members have access to it, I think it's only reasonable that all of us should have access to it. How confidential that document is from there on in, I guess, is a question, but I just wanted to say that.

The Chair: Thank you.

Mr. David Chatters: I also would like to welcome the union members to the committee.

I'd like to go down the route you suggested: that there is enough evidence around the way that Devco is being managed and around the people managing it that it would warrant a full public inquiry. That's a pretty serious charge and a pretty serious challenge, certainly, and one that should have to be taken seriously. I would like you to elaborate a little more on that.

• 2005

The other thing I would like your comment on is that, to my knowledge, there have been at least three offers made to buy Devco. Certainly, one of them—and I spoke to that a moment ago—involved one of the unions involved in the mining operation there. These three offers were made to Nesbitt Burns with the provision that there would be no need for government support in the operation of Devco, that Devco could operate successfully, could mine coal economically, and could provide all the needs of Nova Scotia Power from Cape Breton mines.

It's my understanding—and I'd like your comment on it—that Nesbitt Burns, in conjunction with Joe Shannon, who sits with Nesbitt Burns and analyses these offers as they come in, refused to accept those local offers and turned them away in favour of what at least is rumoured to be a fully American offer that's on the table.

I'd like to have your comments on those things, please.

Mr. Steve Drake: With respect to the last part on the three bids, we're not privy to very much information on the Nesbitt Burns privatization process. We haven't been included in it at all, as a matter of fact. We had one or two very superficial meetings with Nesbitt Burns—for the sake of public relations, as far as we're concerned. Very little information was released. Since that point, it has so far been very secretive, so I don't know what has been going on, except through the rumour mill.

With respect to the three bids, to the best of our knowledge those three local bids were dismissed by someone, by whoever is in charge of the process. Nesbitt Burns and, I suppose, Devco's board of directors, according to Minister Goodale, have almost the final say except for the government, so I suppose they were the parties that dismissed them. But you're correct: those three bids were just dismissed by Nesbitt Burns. I can't expand on it or go any further than that because I don't know much more about it.

On the second point, the public inquiry, we have a crown corporation here that was initiated in 1967 by federal legislation for the good of Canada. It was public policy to deal with the workers fairly and justly and to keep that industry going on an ongoing basis as long as possible, as long as the mines were viable.

We believe that the federal government has information and documentation from companies such as the John T. Boyd Engineering Company. Mr. Tom Mucho, an expert in roof control, was hired by Devco to show them how to get around the roof falls in 7 East and 8 East, the problematic areas. The UMW hired Mr. Christopher Mark, from the National Institute for Occupational Safety and Health in the United States. He has the same credentials. He has a PhD, I believe, in rock mechanics. He came in and showed Devco how to get around these roof control problems. Devco ignored most of those recommendations and placed our people at unnecessary risk in recovering those unnecessary roof falls.

What we've seen over the last four years is incompetence to the nth degree with respect to decisions that were made at the top of the food chain in Devco and the federal government.

“We've lost a billion-dollar industry.” That's what Devco said in 1995. It was a billion-dollar industry in direct and economic spinoffs. This loss was unnecessary. Why did it happen? I think Canadians need to know the answer to that.

So far, Devco and the federal government have been reluctant to answer anything. What we get is rhetoric from the federal government. When we send a letter to the federal government we get “thank you very much for your correspondence”, but no answers. When we sit at a meeting with representatives of the federal government or if we happen to get one of those chance meetings with Devco's board of directors, we get non-answers like “this is confidential” or “you don't have to know about this”. Well, pardon me: we're Canadian taxpayers and we have a right to know what happened to this industry.

• 2010

In Cape Breton, there are 2,000 families—maybe 4,000 families in direct and indirect jobs related to the coal industry—that are going to be socially and economically devastated because of what's going to happen here. This, I believe, is the worst mining disaster in Canadian history.

Answers have to be forthcoming before Devco is privatized. What's that going to take? Obviously the federal government isn't going to give us those answers. The only thing we could have, I believe, that would give us those answers so that we would finally know what happened and why it happened, the only thing that would give us some closure on this issue, we believe, is a full public inquiry.

Mr. David Chatters: I have just one more short question I'd like to get in before the chairman cuts me off.

In regard to those three local bids, last August in the Halifax Chronicle-Herald there was an article in which Mr. Joe Shannon, chairman of the board and, again, the member of the board sitting with Nesbitt Burns analysing the bids, was asked repeatedly if, in fact, he would be among the potential bidders himself. He refused to answer that question. To your knowledge, is the chairman of the board in fact involved in any of the local bids?

Mr. Steve Drake: We have no idea. After the initial meeting with Nesbitt Burns in Sydney, we were kept out of the loop on this communication thing. I think they had one more—I think there were two altogether—very superficial meeting. I can't answer that question because we don't really know.

The Chair: Mr. Wiseman.

Mr. Ricky Wiseman: If I could just touch on that for a second, we're not sure if he's one of the initial investors in looking at the whole thing, but just with regard to the sale of the assets and the successor rights, it kind of ties into this equation here.

I work for the railroad. In our situation, we're assuming that some firm is going to come in and buy this thing and subcontract the work, which takes away successor rights, by the way, according to the Canadian Labour Code; if it's subcontracted, it's then provincially regulated, which takes away our successor rights. There's a grey area there as to whether or not Mr. Shannon or outside interests, people that have not necessarily a vested interested in the sale of it but could possibly benefit by the sale of it.... So I'm not suggesting that he's involved in it, but—

Mr. Brent St. Denis: On a point of order, Mr. Chair, I think we're getting into the territory upon which we were treading with Mr. Chatters' question this afternoon.

Mr. Ricky Wiseman: No, I understand—

Mr. Brent St. Denis: You're imputing motive on the part of people which.... I mean, I say allegations should be made outside where they can be challenged.

The Chair: I would have stopped him had it come to that point, but I wanted to hear what he had to say.

Mr. Ricky Wiseman: I certainly didn't mention anybody—

The Chair: Excuse me, Mr. Wiseman. Do you want to finish that thought very quickly?

Mr. Ricky Wiseman: Yes. I didn't mean to imply that he has a vested interest in the sale. I'm just saying that the opportunity is there for “whoever” to get involved in this.

The Chair: Thank you.

Mr. St. Denis.

Mr. Brent St. Denis: Thank you, Mr. Chairman.

Thank you, gentlemen, for being here.

Since you mentioned Elliot Lake, Mr. Drake, I'd just like to suggest to you that any time you'd like I'd be glad welcome you to Elliot Lake for a visit. I live there. I'm from that area, from a little town, Spanish, 30 miles away. When I was born, there was no Elliot Lake. I know that area very intimately.

I also want to say that there's a lot of uranium in the ground; I don't know how many countless tonnes. The real reason that Elliot Lake closed had little to do with demand. It had to do with the fact that uranium in Saskatchewan and other places is richer. As a result, in the period of 1990 to 1996, about 4,500 direct mining jobs were lost, in a population, I might add, taking in Elliot Lake, then at about 18,000—and in the region, which is roughly the size of Cape Breton, it wouldn't exceed 30,000.

When you talk about the good miners you have in Cape Breton, I believe you. We had good miners in Elliot Lake. I hear so much about the quality of the communities and the people of Cape Breton, and I believe it, because I know people from Cape Breton. I just have to.... I know whereof I speak, having lived through it—and I'll come to my question—and I just want to say on the record that I believe with all my heart that you have the tools, the resources, the people, and the communities such that, with the right approach and the willingness to work together, you'll look at it five years or ten years from now, or maybe sooner, with a different point of view.

• 2015

To my question: with great respect, Mr. Drake, if I were an uninitiated person just learning about coal mining in Cape Breton for the first time and only had access to what you read to me, the conclusion I would come to is, “Jeez, I don't think I want governments running coal mines.” Honestly, that is the conclusion that I believe I would come to.

That said, I want to deal with Bill C-11, because you made reference in your presentation to the importance of paragraph 17(4)(b) and subsection 18(2) when it comes to protecting workers in a situation where they're retiring or being laid off, whatever the situation may be. You refer to the 7,500 past workers that had the protection, so to speak, in those two sections. But could you explain to me, relative to the past workers, how paragraph 17(4)(b) and subsection 18(2) protected them better than your collective agreement?

Mr. Steve Drake: It's very simple. Our collective agreement deals with the regular issues of collective bargaining. There's no guarantee of a job in the collective agreement. There's no guarantee of a pension in the collective agreement. There's no guarantee of ongoing indefinite work in the collective agreement.

With the Cape Breton Development Corporation Act, paragraph 17(4)(b), what they said in that act was.... I have the original minutes right here, from June 20, 1967, the original Hansard. What they said was that they were going to take “all reasonable measures...to reduce as far as possible any economic hardship or unemployment”. What they did for 33 years by that legislation, under different collective agreements over the 33-year period, was that every coal miner was guaranteed a job. Over the 33-year period, they retired 7,500 of those coal miners. In each particular downsizing, whenever it was, 1969, 1974, 1987, and 1992—except for the 1999 one, I should say—in every one of those, the people who fit the downsizing criteria of the day.... If Devco wanted to downsize by 750 people, there was a criteria negotiated to fit those 750 people.

Mr. Brent St. Denis: In the collective...?

Mr. Steve Drake: No, no. It was negotiated by.... It went into the collective agreement, yes, it did, but—

Mr. Brent St. Denis: That's why I'm asking you.

Mr. Steve Drake: —it was criteria based on what Devco needed to do, the downsizing package of the day. We put 750 people out in, say, 1969, or 1970. Then along came another period when Devco had to downsize, in 1978 or something like that. The unions and Devco sat down and found another criteria. All through that period, Devco kept on retiring people without severing anyone—no one—7,500 people by December 31, 2000.

The people who didn't fit the particular criteria at that particular time, whatever time it was, got something else. They got a guarantee of a job, and it's in Devco's agreements with the unions. They're not necessarily in the collective agreement. There were outside agreements. There were letters of understanding, drafted and signed and everything else, to deal with those downsizings. Devco even went to the point with the unions of saying that they were going to do it because they were in a particularly tough economic circumstance.

With number 26 colliery, for instance, we had a problem there. There was an explosion there. The mine shut down. Devco couldn't take that number of people—I think it was in the vicinity of 900 or 1,000 people—and put them into the coal industry, so what they did was that we signed another agreement to keep those people working. They didn't fit the criteria for retirement and Devco couldn't keep them full-time, so we did a job-sharing agreement and kept them all working towards their own retirement benefit.

That happened with 7,500 people, and it wasn't because of the collective agreement. It was because of the policy, this policy of Lester B. Pearson's, and because of what Tom Kent said in 1974. Our agreement doesn't cover that. If we had to live just by our agreement, none of our people would be guaranteed a job or a pension. Therein lies the problem.

In privatization, if Bill C-11 goes through, we'll have a collective agreement. We will not have the legislation.

A voice: Or the law.

Mr. Steve Drake: We won't have the law.

• 2020

Mr. Brent St. Denis: I'd like to move to my second short question, Mr. Chair.

Some hon. members: Oh, oh!

Mr. Brent St. Denis: Well, as you know, we gave up the time this afternoon.

The Chair: It's okay. I'm only going to give you the same time that I gave Mr. Chatters. Go ahead.

Mr. Brent St. Denis: I want to go to another question, Mr. Drake, but I just want to say that there were a lot of negotiations—and there were no absolutes in those situations either.

Let's just assume for the moment that privatization does occur. Given the quality of the mine workers you're talking about, and given the history, do you have any reason to believe that could not be a profitable and beneficial situation for the workers and the communities?

A voice: No.

The Chair: Mr. Drake, you have about a minute.

Mr. Steve Drake: There's no reason in the world to believe that miners in Cape Breton can't operate successfully in a private coal operation or in a crown operation, but you have to give them the tools. Right now, with the deterioration of the Prince Mine, with lack of capital investment in that mine—

A voice: With the age of the workforce—

Mr. Steve Drake: —with the age of the workforce, we believe that the Government of Canada is not giving us the proper tools to successfully operate a coal industry. We believe we could operate it if they'd negotiate a proper downsizing package and put the proper coal miners in place.

The Chair: Thank you, Mr. St. Denis.

Madam Dockrill.

Mrs. Michelle Dockrill: Thank you, Mr. Chair.

I want to say thanks, guys, for being here. As a Cape Bretoner, I know that one of the things we're always aware of is that when we ask the union leaders to give us a response with respect to an issue, they make sure they do their homework. I want to commend you on that.

One of the issues that concerns me goes somewhat to Mr. St. Denis' question about the collective agreements.

I want you to correct me if I'm wrong here, Steve. When you go through the collective agreement and through the last 30-some years in the corporation with respect to workforce reduction, you see that management and the unions have figured out an amicable way to resolve the workforce reduction. Is it not a fact that the collective agreement does not anywhere address a closure, which is exactly what we're talking about here in terms of the federal government getting out of the industry and the books opening up under the private sector? Is that—

Mr. Steve Drake: That's exactly correct. None of our collective—

The Chair: Excuse me, Mr. Drake. Madam Dockrill probably wanted to add for you that you want to address all of your questions to the chair so that they come to the committee. That way, you won't have a dialogue with—

Mrs. Michelle Dockrill: Sorry.

Mr. Steve Drake: I'm sorry, Mr. Chairman. I'm a chairman myself and I get the same problem sometimes.

The Chair: Go ahead.

Mr. Steve Drake: That's exactly correct, Mr. Chairman. The collective agreement I have in front of me is the most recent one. It expired, by the way, on December 31, 1998. It's the UMWA collective agreement. Letter of understanding number 13 talks about early retirement, incentive plan, and severance pay. It doesn't address closure. It's for an ongoing operation. This does not address closure.

Closure, we believe, is for the Canada Labour Code and properly constructed negotiations under the joint planning committee, which we didn't get. We had to force it—

A voice: But under the auspices of the Devco act—

Mr. Steve Drake: —on the federal government. We didn't get it the way we should have.

The Chair: Madam Dockrill.

Mrs. Michelle Dockrill: Mr. Chair, my second question....

You've made reference to 1967 and what happened with respect to and the reason for the Cape Breton Development Corporation Act. I just want to read you something and then I want to ask you a question following it. It's from December 29—

The Chair: We're still talking to the chair, right?

Mrs. Michelle Dockrill: Yes. Sorry, Mr. Chair.

The Chair: Right.

Mrs. Michelle Dockrill: Mr. Chair, I'd like to read this and then ask a question of the witness, if that's okay with you, Mr. Chair.

The Chair: Good. You're doing well.

Mrs. Michelle Dockrill: From December 29, 1966:

The federal government realizes that the Cape Breton coal problem is essentially a social one. It is because of its awareness of and concern for the well-being of individuals and their communities that the federal government is prepared to assist, on a massive scale, the transition of the area from dependence on a declining natural resource to a sound economic base....

That is a 1966 policy statement by the Prime Minister with respect to Cape Breton coal.

Unfortunately, we find ourselves, Mr. Chair, at the same point we were in 1966. I'd like to ask this of the witness: what happened in that timeframe that we didn't end up being brought to a sound economic base? What does he feel the federal government's responsibility is to the miners, their families, and the community to guarantee that we are brought to that sound economic base?

Mr. Steve Drake: Well, there are a lot of things—

The Chair: Excuse me, Mr. Drake. Can I ask if you'd resist the temptation of giving a PhD thesis on this one? I don't mean to be sarcastic, but I suspect that you could probably wax eloquent the rest of the evening.

Mr. Steve Drake: Yes, philosophically for an hour—but I won't.

The Chair: Two minutes.

• 2025

Mr. Steve Drake: All kinds of things happened over the past 33 years in the Cape Breton economy, just like everywhere else. There were a lot of efforts made, I believe, some of them sincere, some of them not, to diversify the Cape Breton economy. For whatever reason, there were a lot of failures.

The bottom line on the whole issue is that for what Devco was designed to do, the job isn't complete yet. They still have a job to do. There is still an economic situation that could be considered a crisis right now in Cape Breton, I guess, which hasn't been addressed. The second part of that is that there is still a social problem there. There are still employees who, under the act, the corporation is responsible for; the corporation is responsible for treating them as reasonably well as possible. That's what the act said. It was humanitarian, compassionate, social legislation.

So there are a lot of issues that haven't been addressed. I don't know how we could ever get to that point. I know that the ID division of Devco was hived off and that the government is saying that's one of the things they don't have to look after any more, but the employees were never hived off and paragraph 17(4)(b) is still there: it's the responsibility of the Government of Canada to look after those employees—by law. That law is still on the statute books and if this committee does what's right and just in comparison with Prime Minister Lester B. Pearson's statement—a Liberal Prime Minister—paragraph 17(4)(b) and subsection 18(2) will remain in the Devco act.

By the way, when this legislation was passed in the House of Commons, the Prime Minister, our Prime Minister today, Jean Chrétien, was a newly elected MP who voted yes on this legislation. He was in the House of Commons as a backbencher.

The Chair: Somebody will read him the transcripts from this meeting.

Some hon. members: Oh, oh!

The Chair: Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

The uranium mines in Elliot Lake closed because nobody wanted the product any more, the way Mr. St. Denis described it. You mentioned mines in Appalachia that closed, causing devastation. We have a new phenomenon facing the world and it has been given expression through what we call the Kyoto conference or the Kyoto commitment.

I beg to ask, have you given thought to the fact that your industry, the coal industry, is a sunset industry and to the recognition that a tonne of coal produces a tonne of greenhouse gases? Because of that and because of the pressure that is coming onto Canada to meet a commitment it made—which I think is a reduction in greenhouse gas emissions of 190 million tonnes in the next few years—who will buy your coal five years from now? I say that with the greatest respect. The coal industry has been a backbone through all these years, and I do know there is technology that is being developed to trap CO₂ emissions from coal as combusted, but it's so expensive that no one can apply it at this time.

So I wonder if you shouldn't take up Mr. St. Denis' offer to travel to and look at Elliot Lake, to look at what happened there and perhaps investigate what happened to those miners, to all of them that had high-paying jobs and suddenly found themselves gone from there.

Mr. Steve Drake: First, Mr. Reed—

Oh, sorry, Mr. Chair.

First, we know what happened to the miners in Elliot Lake. The same thing happened to the miners in Appalachia, the miners in the U.K., and the miners in Germany. We already know what happened there.

To address the other question with respect to greenhouse gases and who's going to buy our coal in five years, Nova Scotia Power's fuel requirements call for 3 million tonnes of coal over the next twenty-year period. So Nova Scotia Power is either going to buy coal produced in Canada or coal produced in Colombia, where they kill children in coal mines. That's where Nova Scotia Power is buying its coal right now; it's coming into Sydney on boats.

• 2030

We have a ready market. We have the workforce—they're Canadians. We have the product—two billion tonnes of coal in the ground in Cape Breton.

Now, the John T. Boyd study says that unlike the uranium mines.... The John T. Boyd study, which is a $500,000 government document that this government paid for, says that by this year, if the right decisions had been made, if we'd had competent people running the industry, we would have made $26,840,000 in profit this year, whether it was a crown corporation or a private company, then next year we would have made $54 million in profit, and the year after that we would have made $64 million. So there is a market for the next 20 years.

On top of that, in the document we handed out, there are attachments at the back. There are two graphs, Mr. Chairman. One is on greenhouse gases and the other is on sulphur dioxide. These are Nova Scotia Power projections, by the way: burning 3 million tonnes of coal over the next 10 years. By 2008, Nova Scotia Power, doing what they're doing right now with the new fuel mix—they're going to introduce gas into one of their power plants—will have a 20% decline in greenhouse gas emissions.

Also—and these are Nova Scotia Power numbers, by the way—by the year 2008, by introducing gas into one of their power plants, they'll have a 10% reduction in sulphur emissions. On top of that, as far as I know—and we're very concerned about the environment—the environmental improvement in coal over the past 50 years is about a 400% improvement in the burn efficiency. That number is from The Coal Association of Canada.

On top of that, the issue over global warming is not proven science; it's pretty sketchy right now. I believe the Senate in the United States is looking very seriously at not accepting the Kyoto recommendations. I think the Canadian government should look very seriously at what that will do to the auto industry, to heavy industry, to coal- and oil-producing companies. Anything of that nature is going to be severely impacted and so are those communities. One of those communities is in Ontario: car plants.

It's a very serious issue and I'm not trying to brush it aside, but our industry can survive and work and still stay within any commitments that this government would make with respect to the Kyoto agreement—I think it's 5%-plus below 1990 levels. This document shows that Nova Scotia Power is projecting that they can do it, so I think we are well within those limits.

The Chair: Another question, Mr. Reed?

Mr. Julian Reed: Do you accept the proposition that those coal plants may be the last coal plants built?

Mr. Steve Drake: No, I don't. I don't think anybody should accept that. The Department of Energy in the United States is projecting a 20% increase in coal-fired energy production by the year 2010, by the way, and the majority of that is going to happen in China.

Worldwide, developing nations right now want to get on the Internet, to get telecommunications. They want to get into this new economy and they need electricity. The closest source of fuel they have, particularly China, is coal, and they're not bound by the Kyoto agreement, so they're going to do it, and if we have to—

Mr. Julian Reed: That's—

Mr. Steve Drake: We have a market already. Why would we even consider burning Colombian coal in Nova Scotia when we can produce...? And it has to be 3 million tonnes because that's what their burn requirement calls for, in their own numbers. Why would we consider burning Colombian coal or Venezuelan coal or United States coal and sending that money somewhere else instead of employing Canadians down in the Cape Breton coal mines to produce that 3 million tonnes? That doesn't make sense to me.

Mr. Julian Reed: Nobody's asking that at all. Nobody's suggesting that—

Mr. Steve Drake: Somebody is—

Mr. Julian Reed: —for one minute. This morning—

Mr. Steve Drake: —maybe not here, but they're shutting our industry down.

The Chair: Let's finish this one off, Mr. Reed.

Mr. Julian Reed: Sorry, Mr. Chairman.

I sit on an environment committee, as you can imagine—

Mr. Steve Drake: Yes.

Mr. Julian Reed: —and I've just heard a treatise on the drift of mercury that's depositing in the Arctic. It's coming from the combustion of coal, mainly in China. So if that's a reality, whether you accept global warming or not, it's a reality that we have to contend with in some way.

Mr. Steve Drake: Could I, Mr. Chairman, just...?

The Chair: I think it's an observation, Mr. Drake, so I'm going to leave it as an observation.

• 2035

We're at the end of the meeting, but unless there are other members who have questions I'm going to give Mr. Mancini a turn even though he isn't on the committee.

Mr. Peter Mancini: I'll take the Tory and Bloc time, Mr. Chair. I appreciate this. I just have one question.

The Chair: They're not here and they can't use it.

Mr. Peter Mancini: To follow Mr. Reed's question, because he raised, I think, what is a legitimate concern about the environment, am I not correct, Mr. Drake, that the four unions, when the privatization plan was announced, put together a labour stabilization plan which would have dealt with a four- to five-year plan that would have mined the coal in Phalen and at the same time dealt with the remediation of the coal sites to provide what section 17 of the current Devco act provided for, that is, a plan for the least amount of harm to the workers of the Cape Breton Development Corporation? Was there a plan presented that would have seen Devco withdraw in a less dramatic fashion?

Mr. Steve Drake: Mr. Chairman, that's exactly correct. On January 11, after much persuasion, Minister Goodale came to Cape Breton. We met with him in Cape Breton. We gave him a plan that had been developed over a period of time. We felt the plan could work. We still think it can work. It's called the labour stabilization plan. Once again, it's included in the document.

What it shows is that with a Prince Mine operation, with some capital investment to get it back to where it should be, with a Donkin operation, with the remediation that has to be done by the Government of Canada—it's a commitment—and training and attrition, they're all normal things that we could do.... We have a plan for between 2001 and 2006 that could take these people out of the workforce and have a small, young, vibrant workforce down there producing the requirements for Nova Scotia Power.

We gave this information to the federal government in January 1999 and it was dismissed entirely. They didn't want to look at it. They were not interested in it. It's unfortunate, because what we said to the government at that time was that if they wanted to get out of this industry we'd provide them with the tools to get out of this industry. We said to them, “Cut the cord, but when you do it, do it with some decency, do it with some dignity. These people have been here all their lives. They rose to the task when you needed them during the oil crisis. They went underground and risked their lives to recover this equipment during these roof falls. Give them a bit of decency.” The federal government said no.

The Chair: Mr. Mancini, are you finished?

Mr. Peter Mancini: I have just one other question, thank you, Mr. Chairman.

In the new federal budget in terms of the coal industry—you made some comments—there is money for new coal technology. Have you given any thought to that under the current Devco legislation in terms of keeping open a viable coal industry?

Mr. Steve Drake: That's another.... When Mr. Martin made his budget speech, he spoke of forward-thinking nations and how nations that are going to thrive in the new millennium are going to have to do things a little differently. That's not an exact quote, but it's pretty close.

Mr. Martin spoke eloquently about the environment and new technologies. One of the things he said Canada has to do is develop new ways of burning coal; we have to be on the edge of clean coal technologies.

I wrote Mr. Martin a letter and asked him about that and said that we could develop that clean coal technology in Cape Breton, that we could be part of the new economy. I can't even remember if I got a response.... Yes, I did get a response, but the response was no—very polite, but no. I even asked Mr. Martin about having a centre of excellence in Cape Breton Island with relation to the petroleum industry and the coal industry and calling it the Hydrocarbon Centre of Excellence for Canada and developing new technology in Cape Breton Island. Once again, there was a non-response.

There are ways to deal with coal. Like it or not, 20 years from now you're going to be burning a lot more in the world than you are today, and at some point you're going to be burning it here, because oil.... The Department of Energy, Mr. Chairman, in the United States, and The Coal Association of Canada have done estimates and they're pretty accurate. The world reserves of oil are about 40 years, of gas about 60 years, and of coal about 220 years, so when oil and gas run out, we're not going to do this nuclear thing. What are we going to burn? We're going to burn coal.

• 2040

Mr. Peter Mancini: I have one final question, Mr. Chair.

I note from the other unions that this matter is currently in arbitration. I have just a quick question. When were you notified to come here and has the fact that the matter is in arbitration....? Is that where the presidents of the other unions are? Has that affected the presentation here today?

Mr. Ricky Wiseman: Actually, I'll comment on that.

I was notified on Monday morning about this. Our president is not involved in the arbitration—just myself and another gentlemen. We had to leave the arbitration to come here.

Mr. Leo Gracie: Mr. Chair, our president is involved in the arbitration. We were notified on Friday of the meeting here today.

Mr. Kenneth Greene: I'm involved in the arbitration in place of our president, and our past president is there in my place. I was notified yesterday at noon.

Mr. Peter Mancini: Thank you.

The Chair: The chair appreciates the fact that all of you left another priority in order to attend to this one.

When the chair sent out the invitations, it was at the earliest opportunity after the bill was handed to the committee.

I know Mr. Mancini wasn't trying to imply anything by his question, but for those who are interested when they read the record about why there didn't seem to be a lot notice, the committee is never seized of the right or the opportunity to give advance notice to potential witnesses because the committee can't act until it actually receives the bill.

So as we are bound by Parliament, by the House, we act when the House charges us with a task. Committees are essentially obligated to deal with legislation when it is first given to committee. Sometimes committees defer for a very brief time, but their chief responsibility is to handle an agenda for legislation.

The parliamentary secretary, who just finished off Bill C-12, was reminiscing this afternoon about the fact that her bill landed on this committee while it was in the middle of something else and the committee essentially has had to put its other studies to one side.

Mr. Mancini's question should really be taken in the context in which it was intended, that is, that parliamentarians on committees and committees themselves find themselves in a situation not unlike your own. You're in the middle of negotiations and we're in the middle of a study. The House of Commons, in its wisdom, gave us this bill, and the committee, in its like wisdom, responded with alacrity.

Gentlemen, I thank you very much for being here. The chair gave unusual latitude to members simply because this is a serious issue for everybody and the chair wanted to take note of the fact that you came at such short notice and from a long distance with preparation that was expeditious. We wanted to make it as productive an occasion for us, for the committee, as it could possibly be, and I think we've accomplished that goal, with your assistance. On behalf of all committee members, I thank you very much.

The meeting is adjourned to the call of the chair, until tomorrow afternoon. Thank you.