AANR Committee Meeting

STANDING COMMITTEE ON ABORIGINAL AFFAIRS, NORTHERN DEVELOPMENT AND NATURAL RESOURCES

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES, DU DÉVELOPPEMENT DU GRAND NORD ET DES RESSOURCES NATURELLES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 17, 2001

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[English]

The Chair (Ms. Nancy Karetak-Lindell (Nunavut, Lib.)): I'd like to bring this meeting to order, since we have a quorum and limited time to address the report you have in front of you. If any member doesn't have it, we would appreciate getting it distributed.

We felt that this morning, in the time between eleven and twelve, we would look at the draft report that you have in front of you, very quickly put together by our researcher.

Mary, thank you for that, in the very short time that we asked you to produce this.

This is a draft of what we felt the consensus was. If it isn't, then bear with us. This was the understanding we got from the last committee meeting, that this was sort of the approach we wanted to take. We thought that between eleven and twelve we would finesse this letter and hopefully have it in good form to give to the minister. It's totally open for discussion, so if you feel there are any changes you want to make on this, this is the time to present them.

One of my suggestions was that there wasn't enough emphasis or differentiation between first nations communities. Even when we say “off-reserve”, it doesn't address the north of 60 specifically. So I was suggesting that we have special words inserted so that does come across, that we're also talking about north of 60, Inuit communities usually, in the territories. We see in the sixth mandate that it deals mainly with first nations housing issues, and getting lumped in under the big umbrella, sometimes aboriginal people don't feel that it's fully addressing the north-of-60 needs. So I just throw that out to you. That would be my suggestion: that we change the wording so that comes across.

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Mr. Godfrey.

Mr. John Godfrey (Don Valley West, Lib.): I just want to congratulate the researcher and the chair, if I may, on doing a really good job of making coherent a rather free-flowing conversation. I think it captures all of the elements that were alluded to. And I like very much the fact that you've extended the reach to north of 60 and other communities, as well.

I think you've made the right kind of emphasis. That is to say, it's on the positive, on the best practices, on the things that have grown out. You've also stressed, and you've actually put it on paper, that this may have grown up despite the rules that are in place. I think that's very important to have put on paper.

I think that if they do the job they hope they will, that would give us a really strong basis for inviting in some of those communities that they will have identified, and in thinking about some of those specific details they will have cleared away a lot of the brush and we'll be able to get on with it.

So I'm entirely supportive of sending this letter as is.

The Chair: I know Mary jotted some notes as to the points I was trying to make. I don't know if at this time we want to give her an opportunity to give us the changes she might want to insert at those page 2 bullets.

Ms. Mary Hurley (Committee Researcher): Maybe the first thing I can do is to refer you to the second paragraph on page 1, where I tried to include the north and south of the 60th parallel. I think it would just be a question of extending that consideration to the bullets.

So in the first bullet we would add at the end of it: “on- and off-reserve and north of 60”. And in the fourth bullet, the point the chair has been making is that there are very special considerations that do hold north of 60, including the expensive travel, the living expenses, the high cost of living, etc. So in order to draw attention to that, it would be important in the “obstacles” bullet to say, at the end: “with particular attention to the circumstances of aboriginal communities”. I think we have to be broader than saying “Inuit communities”, because there are aboriginal communities north of 60 that are not Inuit. So it would be, “with particular attention to the circumstances of aboriginal communities north of 60”.

I think that captures the points you wanted to make.

The Chair: One of those is really the transportation and the limited time slot that you have in getting building supplies to some of the communities.

Mr. Finlay.

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Mr. John Finlay (Oxford, Lib.): I just want to make a little suggestion, and you can take it or not. In the second bullet, I wonder whether it wouldn't read a little clearer if we said “whether housing successes occurred within existing guidelines or in spite of them”. “Despite” sort of suggests an action to me.

The Chair: Mr. Godfrey...

Mr. John Finlay: Did you put that in?

Mr. John Godfrey: This is a very fine point.

Mr. John Finlay: Oh, all right.

Mr. John Godfrey: I'm not wedded to despite or to spite.

The Chair: Mr. Chatters.

Mr. David Chatters (Athabasca, Canadian Alliance): I would like a quick explanation on the first paragraph on the second page, where it says:

Our discussions have led us to conclude that we should focus on developing and putting into better practice measures that are rooted in fundamental principles that we believe you share.

What are those fundamental principles that you believe we share?

Ms. Mary Hurley: What I tried to convey in the following two sentences were the principles that I think the minister has been emphasizing, both Minister Stewart and Minister Nault, ever since the Gathering Strength initiative was announced in January 1998. I was hoping that the two sentences following that sentence expressed the essence of those principles.

Mr. David Chatters: I still am at a loss as to what values, traditions, and practices you're making reference to.

The Chair: Any suggestions?

Mr. David Chatters: No, I just wanted to know what you're referring to.

Ms. Mary Hurley: The point that was made in the meeting the other day that I was trying to get across without using the term that was used in the meeting... I think there was consensus that it was important that what was called “Eurocentric values” not be imposed. That's the essence of what I was trying to capture there: I didn't want to use the term “Eurocentric”.

Mr. David Chatters: Okay. So essentially you're saying that the principles of supplying housing are modified to meet community needs, that kind of thing.

Ms. Mary Hurley: Exactly.

Mr. David Chatters: Okay.

Down in the next paragraph, you make reference in a couple of places to success stories that do exist. What success stories were you referring to?

Ms. Mary Hurley: There again, I was trying to reflect what was said in the meeting the other day. I believe Mr. Godfrey gave the example of the Six Nations, and I think there was other discussion... I can't remember exactly or precisely, but there were other individuals—I think even Mrs. Hinton. They were saying that we know solutions have been found out there, so that's why I didn't refer to anything specific and I left it kind of general, because at the moment the information we have is only anecdotal. So that's where that came from.

Mr. David Chatters: Yes, I don't disagree with any of it. I just wondered. And I missed some of the meetings you had, so I may have missed that discussion.

Essentially, I don't have a problem with the letter. I think it's fine. It tends to be, in my opinion, a bit of bureaucratic paper-shuffling rather than concrete action, but if that's the wish of the committee to engage in that kind of thing...

The Chair: Mr. Godfrey.

Mr. John Godfrey: As a useful bit of history along the meeting that we had last Tuesday, it was really a very good meeting in the sense that we all participated. Mr. Elley was anxious—and initially I was as well—that we should get at the work ourselves. But the point was made that even with the best will in the world, we weren't going to get much done during the summer, because we're not going to be here and we won't be able to re-form ourselves. Despite your colleague, Mrs. Hinton, suggesting we should just get together in the summer, that didn't seem to have a whole lot of resonance.

Mr. Martin wanted a task force right away. So we tried to combine the two by having this group that we're asking the minister to pull together to do the preliminary work for us. Therefore, we'd be in a position when we start in the fall to have a much better sense of what's out there in terms of success stories.

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The emphasis on success stories is to break the mould of focusing on failure, on disaster, and on victimhood, and to show that, to the contrary, there are actual communities out there that have come up with some fairly neat ways of going at this stuff. Those ways may take a traditional form, which we've alluded to, or they may look Eurocentric—home ownership. The point was that we should try to change the whole nature of the game by focusing on real, live, concrete examples. The one from the Six Nations is in spite of the rules. They actually went out there 30 years ago and changed the paradigm.

So that's what that's all about. I think everybody signed off on that, including Mr. Elley. We all said that makes sense, given what we can do over the summer, which isn't much, but we will come back to it as a group.

Mr. David Chatters: It sounds reasonable to me. I've actually seen some of those success stories, more off reserve than on reserve. It doesn't matter where it is. If there's a model there, we should be looking at it. So I would support it.

The Chair: We wanted to be able to present something that would flag the situation so that we could use it to highlight these needs again to the Minister of Finance and the appropriate ministers. If we made it too narrow by offering our solutions on how to fix things, then again we would just be doing a fix-it method from here and not from the community. So we thought if we took this approach, then it would be an inclusive way of participation from the communities who already are the most familiar with how they might want to remedy this awful situation.

Mr. David Chatters: I would support that, especially with the emphasis on the successful examples. I know of lots of examples out there that put huge sums of money into housing and yet there's always a shortage of housing. And families are having access to several new homes in the period of time they raise a family.

The reality is, in the non-aboriginal community, if a family were to have access to one new home in their lifetime, especially in the lifetime that they raise a family and the family grows up and goes, that's all that can be expected. So part of that successful example has to be how we would maintain a house for a family for that period of time, because we'll never solve the problem if a family needs a new house every 15 or 20 years. We'll never catch up. We'll never make it.

If we can build in supervision and maintenance models that will help a home to last for 50 years in a community, then we have a chance of eventually catching up to this thing and providing decent homes. So I like the emphasis on looking at how people are being successful.

The Chair: One of the things that came out in some of the presentations from the witnesses was what causes that difference between aboriginal communities and other parts of Canada. It is the size of the families. It's never just you and your spouse and your children, because people take in their grandchildren or their cousins. It's just the numbers of people who have to live in these units... that you just can't have the same life expectancy. We're trying to deal with very different conditions.

Mr. David Chatters: Yes, truly. Although under the circumstances you describe, if you adjust your maintenance program... because a house has more people in it, that doesn't need to necessarily shorten its lifespan to the degree that you do.

A number of the reserves, not particularly in my constituency, but certainly in my province, have huge resource sources funnelled in and they have a lot of money. And we're still seeing that the turnover in housing is tremendous. It's not as much of a hardship there, because they have more resources to work with.

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I think we have to look at some of the reasons and at what kind of a system we could have in place to address that.

On the mould issue that we heard about, I'm absolutely convinced that if we had a proper maintenance program and adjusted the physical infrastructure of the house to deal with the moisture in the house, we could have prevented a lot of that problem. It didn't, and eventually it gets to the point where your only choice is to burn the house down and start over again. In a 15-year-old house that should never happen.

The Chair: You want to go even a little step backwards and you want something you can maintain well.

Mr. David Chatters: Yes, that's to start out with a good solid foundation.

The Chair: It came out from some of the witnesses that you want a nice design, good engineering, and a solid house to begin with.

Mr. David Chatters: Yes, absolutely.

The Chair: Mr. Cardin.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): When Mr. St-Julien presented the problem, he gave the impression that he considered the situation urgent. Of course, Mr. Marceau is the Bloc Québécois MP who usually handles aboriginal issues. This letter would appear to meet all expectations and demands. I would nevertheless like to ask a few questions in order to understand better, given that I have not been in on the whole aboriginal housing file.

I could sense a feeling of urgency in Mr. St-Julien's proposal at the time. The text on page 2 reads: "We ought to concentrate on developing and implementing practical measures". In the second paragraph, it says:

We need to make the communities more capable of planning and implementing independently, for example through accelerated skills acquisition programs...

I do not get a sense of this urgency that Mr. St-Julien appeared to feel when I read: “skills acquisition”. I do not know if this situation is being responded to on an urgent basis elsewhere, whether for health or other issues. I wished to point it out in any event. Furthermore, Mr. Marceau also shared these concerns.

How can one reconcile the urgency of the situation and the time required to acquire skills?

[English]

The Chair: Mr. Godfrey, and Mr. Carignan.

[Translation]

Mr. John Godfrey: I will attempt to reconcile the two aspects, if I may. As Mr. St-Julien is not here, it is easy for me to speak on his behalf. He raised a specific situation concerning Cree villages in Northern Quebec. The committee's role is not to solve such a specific administrative problem. This would involve more direct negotiations with the Department of Indian Affairs and Northern Development. We do not have administrative or executive power. It is not up to us to do this. I have always considered that this situation constituted a specific instance of a more general situation. Our role is to speak of general policy and not to address specific problems. We are not equipped to do so.

That is why I consider that this first intervention constitutes an effective and concrete representation of the problem, but do not feel that it is up to us to solve this concrete problem.

Mr. Serge Cardin: That's it.

Mr. John Godfrey: That's it.

Mr. Serge Cardin: The overall view of the issue works as you just explained it, and Mr. Marceau agrees with you. We are nevertheless here, from one standpoint, to solve problems.

To all practical purposes, I want to know whether a way has been found somewhere within the Department or the government, to deal with the problem that was raised by Mr. St-Julien, because we are here to solve problems.

Mr. John Godfrey: We are doing something for Mr. St-Julien, as it happens. Every time the Minister or another representative, for example a Cree or Naskapi, appears, it gives Mr. St-Julien an opportunity to represent his community, and he does so. I therefore believe that we have provided him with a forum to advance his case.

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[English]

The Chair: Mr. Carignan.

[Translation]

Mr. Jean-Guy Carignan (Québec East, Lib.): Thank you Madam Chair. I support what Mr. Godfrey has just said. There is no contradiction between this letter and Mr. St-Julien's concerns. As the letter says, the situation is one that has been very familiar for a number of years because of the reports that have been submitted to us. The reports have been thoroughly analyzed. It has been written that we do not intend to begin doing these studies over again. The situation is known and it is urgent.

The urgencies to which Mr. St-Julien often alluded resemble the situation that he described. He often said that everything came from the South and that it was necessary to teach aboriginal people to learn to take act on their own and govern themselves. The situation persists and it will be resolved over time or soon. But it is urgent to deal with the problem immediately, as it is written. This will be done through the last measure. The problem can be dealt with because we are very familiar with the situation.

That is why I approve the proposed action. I have only one question, Madam Chair. Is the 4 September deadline realistic in view of the summer period? Without wishing to answer the question myself, I want to point out that the problem is well known and that we can base ourselves on successful experiments, examples that worked. We will thus perhaps be able to get there. That is my comment on how realistic the deadline is. Thank you.

[English]

The Chair: The intention of the committee was that it wouldn't be a long drawn out one. We felt that September 4 was a reasonable time to put together a working paper to give to the minister.

We have another issue to deal with.

Mr. Finlay.

Mr. John Finlay: Madam Chair, going on from Mr. Carignan's point, what struck me is whether there is anything magic about September 4. The House doesn't come back until September 17. I just wonder why we need the working paper ready for two weeks in advance.

The Chair: Perhaps I can get Mary to shed some light on that. It's not a fixed date.

Ms. Mary Hurley: It's a starting position, but I can tell you what my thinking was in choosing that date. It's the day after Labour Day, so I'm not asking for it on Labour Day. In addition, it seemed to me in line with what the committee was saying the other day that a short timeframe was being asked for. It was my feeling that it might be advantageous to have the report prior to the return of Parliament so that the researchers might have a chance to take a look at it and give the committee a little analysis on the date of their coming back. There's no magic in that date. It could be any date.

The Chair: Mr. Godfrey.

Mr. John Godfrey: I would favour leaving the date as is, but having an understanding among ourselves, that if they come back and ask for another couple of weeks, that we would agree to that informally among ourselves. Because from a practical point of view, the House may come back on September 17, but this committee will have to be reconstituted.

We will not be meeting as a committee before October. That's the truth of it. So I think putting September 4 in is a good idea. We should give the chair power to negotiate a later date, because, from a practical point of view, this will put a little heat under it.

The Chair: All right. There seems to be a general consensus that most people agree with the thrust of the letter with those few changes we put in.

I want to draw your attention to Bill S-24. We have to deal with it after the break.

Mr. John Godfrey: Do you need a motion that we are in agreement?

The Chair: Yes. Is everyone in agreement with this letter?

Some hon. members: Agreed.

The Chair: And we'll work with the date.

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Thank you.

We have to deal with Bill S-24 the week after the break. We have a request from the House leader for us to sit on Monday, May 28, in the afternoon and listen to some witnesses who wish to appear before the committee. Whether we can do a clause-by-clause that day will depend on the wish of the committee. In the event that we couldn't do the clause-by-clause on the 28th, we would have to take some time on the 29th to get this bill before the committee, clause-by-clause done, and report back to the House.

So I need some direction from this committee as to your feelings on meeting on May 28 in the afternoon and addressing Bill S-24. We want to be able to give some time to the researchers and the clerk to get the witnesses. I understand the Canadian Alliance has two witnesses they would like to give to us, and that will give us time to maybe get some witnesses from different members. I don't know if Mary has something to add to this.

Ms. Mary Hurley: Maybe I can just inform the committee of the process that occurred on the Senate side, where the bill was introduced. There were four witnesses who were heard by the Senate committee: the Minister of Indian Affairs and Northern Development; the Grand Chief of the Mohawks of Kanasatake; Mr. Pierre Goyette, a resident of the village of Oka who had objections to some aspects of the interim land governance agreement that the bill is to ratify; Alan Gabriel, who you might remember as one of the individuals who represented the traditionalists in the summer of 1990; and the Mayor of Oka. There were attempts, I believe, to get somebody from the government of Quebec, but they were unsuccessful. So those are the witnesses who were heard on the Senate side.

The Chair: Is there any way we could get some information as to whether the afternoon of May 28 would be a difficult time for members to attend a committee meeting?

Mr. Cardin.

[Translation]

Mr. Serge Cardin: I am not usually the person who handles aboriginal affairs, but rather my colleague Richard Marceau. I cannot speak on his behalf. I will not be available, but I hope that my colleague Richard Marceau will be.

[English]

The Chair: Okay, we can check with his office.

Mr. Chatters.

Mr. David Chatters: I too am not the critic for aboriginal affairs, Maurice is, and I don't know if he can be here or not. The nuclear waste bill is in the House that afternoon, and I will be required to be in the House to deal with it. So if Maurice is available, or Reed—either one—certainly.

The Chair: Mr. Godfrey.

Mr. John Godfrey: Unfortunately, I'm chairing another committee at 3:15 p.m. that afternoon.

The Chair: Mr. Carignan.

Mr. Jean-Guy Carignan: I'll be available.

The Chair: We could also call around for replacements. So do you have any objections to calling a meeting for that afternoon to try to deal with Bill S-24?

Mr. David Chatters: Not at all.

The Chair: So you want us to go ahead, try to see what we can do, and make sure the witness list is set up, with that information sent on to your offices.

We'll try for 3:30 p.m., Monday, May 28. Thank you.

We'll try to make sure you have a list of the witnesses, but first, again, I'd like to get some direction from the committee as to the witness list. I know for sure we're getting two names from the Canadian Alliance, and I'm not sure if anyone from the other parties or from the government side wishes to submit possible witnesses. We're just going to do that one afternoon for witnesses, so we hope to limit it to maybe four witnesses, because we want to be able to deal with the bill that afternoon. Then we can stay with our regular schedule for May 29 and 31, which are briefings with the Indian Claims Commission and the Métis Council.

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Mr. Godfrey.

Mr. John Godfrey: Do we, by any chance, know the names of the two Alliance witnesses? Are they two of the ones who appeared before the Senate or are they different ones?

Mr. David Chatters: I'm not aware of who they are.

The Chair: I haven't received any names yet, but as soon as we have that information, we'll get the clerk to send it to the offices. Jim should be back by then also.

Because of the time factor, I also have to get an okay from the committee that I shall, along with the researcher and maybe some of the vice-chairs, finalize the witnesses. So am I given the approval to finalize the witness list, so that it's not something we're leaving our clerks to take care of the day before they have to travel?

A voice: Sure.

The Chair: Thank you.

We're just waiting for the Minister of Natural Resources to come in. I understood he was going to come in at noon. Let's get on with our lunch, and then we'll all be ready when the minister comes in.

The meeting is adjourned for 10 minutes.

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The Chair: I shall call this meeting of May 17 back to order.

Thank you for coming, Minister. I think you have enough resource staff with you today to help with your presentation. We shall get on with your presentation as soon as possible to make the most of the time left to us. Thank you again for coming.

On the agenda today are the main estimates for 2001-2002.

Mr. Minister, go ahead.

Hon. Ralph Goodale (Minister of Natural Resources): Thank you, Madam Chair. My apologies to you and members of the committee, and my thanks for your indulgence. I was chairing a committee of the cabinet until a few moments ago and it ran a bit longer than we expected. I'm sorry to be a few moments late and I appreciate your patience.

It's a pleasure, as always, to appear before this committee with senior officials from the Department of Natural Resources Canada. I welcome the opportunity to try to respond to your comments and questions about the activities of the department.

I'm always happy to have the opportunity to talk about Canada's natural resource sectors. I believe too many people think of natural resources as some kind of ancient and dusty relic of the so-called old economy, whose utility is fading with every passing day. The analysts who trot out that kind of stuff aggravate me to no end. A relic, I think, is a gross misnomer. I think members of this committee agree wholeheartedly with my assessment that the old criticism couldn't be further from the truth.

Canada's natural resources sectors, including energy, mining, forestry, and earth sciences, make up more than 11% of Canada's gross domestic product, $90 billion on an annual basis. The sectors directly employ more than 750,000 Canadians. They create about an equal amount of indirect employment. Most importantly, they're the economic lifeblood for over 3.5 million people in over 600 communities from coast to coast in this country. Natural resources account for about 22% of all new capital investment in Canada every year, about $35 billion worth. They generate well over $100 billion in exports, a huge contribution to our favourable trade surplus.

For example, 10% of the world's forests are located in Canada. We are the largest single exporter of forest products on the face of the earth. These sectors are big and are hugely important.

We are one of the world's largest mineral producers and exporters. Over 80% of our minerals are exported. We're the world's largest producer of potash, the world's largest producer of uranium, the world's second largest producer of nickel, and the world's fourth largest producer of gold and copper.

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We're becoming one of the largest producers of diamonds, Madam Chair, in your part of this country, as you would well know. In the Northwest Territories, we have the $1 billion Ekati diamond mine, producing more than $3 million carats with an average price of $168 per carat—one of the highest prices in the world. Who would have thought, four or five years ago, Canada would be a leading diamond producer? We now are.

We also have some of the largest reserves of energy on earth. We are the third largest producer of natural gas and the fourth largest OECD country in electricity production. Also, our natural resource sectors are ultra-modern. They are using leading-edge science, advanced brain power, and the highest technology. It's every bit as sophisticated and innovative as any other sector of this economy.

It is a little known fact that Canada's natural resource industries, overall, purchase more computer equipment than all other Canadian manufacturing industries combined. They are very much a part of the new economy of the future.

Our geomatic industry, the people who provide surveying, aerial photography, geodesy, mapping, photogrammetry, remote sensing, and geographic information systems, is one of the fastest growing in the world. The global market for these products and services is growing at the rate of about 20% per year. Canada, globally, ranks second only to the United States in technology development and international billings in these fields. We're followed by France, Germany, the United Kingdom, and all of the others.

I think we can put to rest the silly old notion that the natural resource sectors are part of the old economy. They are very much integral to the new economy developing in this country and around the world. I think it's particularly important for us, as policy-makers and legislators, to recognize that fact.

It's also very important to recognize about two-thirds of the main estimates, which you have before you, for the Department of Natural Resources are dedicated to science and technology. The department works in close collaboration with industry in helping to bring about the innovations necessary for advancement.

For example, through public and private sector partnerships, the Canadian oil sands network for research and development, my department, and its research partners, have overcome many of the economic and environmental barriers to oil sands development. The result is now $51 billion in new capital expenditure announcements, making the oil sands Canada's largest natural resource development and trade opportunity in the next decade.

In British Columbia, and indeed across the country, we are also working with Industry Canada and private sector partners, such as Ballard Power Systems Inc., Stuart Energy Systems Inc., and Dynatek Automation Systems Inc., government partners like the Saskatchewan Research Council, and academic partners at McGill University and elsewhere, to help develop the Canadian fuel cell industry. The goal is finding clean, reliable, and sustainable energy sources.

Companies like Ballard Power Systems Inc. and Excelsis are building the capacity to manufacture fuel cell buses and automobiles, while companies like Global Thermal Electric and Hydrogenics are becoming world leaders in stationary fuel cell power generation.

In forestry, we are working with private sector partners, environmental groups, aboriginal peoples, the academic community, other governments, local communities, recreational organizations, landowners, and others on our model forest program. It now has a network of 11 model forests across Canada covering more than six million hectares, where work is being done to increase our scientific knowledge of sustainable forestry practices. Our model forest system is being copied in many other countries around the world.

In the mining sector, we are working with a consortium of companies on the mining automation program to help develop tele-mining, automated robotic systems that allow miners to control the work from above ground to make mining safer, more efficient, and more profitable.

In the geomatic sector, we are working with the Canadian Space Agency and other partners across government and in the private sector on our initiative called “GeoConnexions” to help bring the latest geographic knowledge and information together into one coherent whole, and to use the Internet to make it available to Canadians in every part of this country, including aboriginal, rural, remote, and northern communities.

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I could go on at quite a bit of length about projects like these, but instead, what I am doing today is leaving you with a kit of information about our science and technology activities. That kit of information provides a great deal of other detail on exactly what we do with the budget allocations that we're asking your approval of today.

Let me turn now to another current topic of great importance, a very difficult topic, and that is the status of the Cape Breton Development Corporation, which, as per the announcement of the Government of Canada yesterday, is in the process of shutting down its coal mining operations.

Over the past 30 years, the Government of Canada has invested some $1.8 billion to support DEVCO, and DEVCO continues to require large and ongoing subsidization. During the 1990s, our government and its predecessor set a goal of commercial viability for the corporation. Despite the best efforts of all concerned over the last number of years, that goal has proven to be fundamentally unachievable.

Equally so, despite an 18-month worldwide search for qualified potential purchasers from the private sector, it has proven impossible to conclude an acceptable transaction to privatize DEVCO's last remaining mine, the Prince Colliery. Accordingly, we have made the very tough, but regrettably very necessary, decision to close the Prince mine before the end of this year.

DEVCO management will be sitting down with the employees at DEVCO, probably beginning tomorrow, to discuss a fair and appropriate human resources strategy for the affected workers.

In addition, we have topped up the economic development funds available to Cape Breton to help build a viable new set of economic opportunities for the future. Those funds now total $108 million, including a $12-million contribution from the Government of Nova Scotia.

So far, in less than a year, that funding has generated over 1,300 new Cape Breton jobs in new sectors. That's in addition to the normal investments and support provided by the Atlantic Canada Opportunities Agency, the Enterprise Cape Breton Corporation, and HRDC, Human Resources Development Canada.

Our objective is to help Cape Breton turn the page, to build a future more solidly based upon economic foundations that can truly succeed for the well-being of all for the long term.

The decisions announced yesterday were certainly very difficult ones, but I trust that we are setting the stage for something far better for the future.

Now I would like to spend just a very few minutes on what has become a very hot topic of late, and certainly today, and that's the topic of energy and some of the related environmental issues, such as climate change.

The energy sector is in what can be politely termed the high side of its price cycle worldwide. Even those may not be exactly the words that Canadian consumers would use to describe the situation when they come to “fill 'er up”.

Our energy sector is huge. It represents 7% of our GDP. It is responsible for nearly 10% of our exports. It employs upwards of 200,000 people, and that doesn't account for all of those at service stations and those involved in the wholesale trade in petroleum products.

Our energy sector is also changing, both in geographic terms and in terms of the portfolio of what we have to offer.

There is a great deal more development in the energy sector outside of western Canada than there used to be. I think of the east coast offshore at Hibernia and Sable Island, for example, the developments in the Arctic, and the non-traditional developments in such places as the oil sands in Mr. Chatters' constituency, plus, of course, hydro and the potential for more, plus a growing portfolio of renewable and alternative fuel supplies and sources—wind, solar geothermal, and bioenergy—plus new scientific innovations, like fuel cells, which I referred to earlier.

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Fortunately for Canada, we are a net exporter of virtually all forms of energy. Not surprisingly, our biggest customer is the U.S. This is a very important relationship.

We sell them today, never mind what might happen in the future, more oil than does Saudi Arabia. Over half of our natural gas and 7% of our electricity is exported to the U.S.

On the federal side, our responsibility is mainly for the interprovincial and international movement of energy. We work closely with provincial and territorial governments to ensure a smooth flow, and of course in the energy sector, provincial jurisdictions and provincial authorities are extremely important.

As for our relationship with the United States, we already have in place some very strong consultative mechanisms between my department and the U.S. Department of Energy, including, amongst many other things, a memorandum of understanding on energy, science, and research.

As you know, President Bush has been discussing energy in his country in terms of a crisis in U.S. supply. Today we will see the release of a report prepared by Vice President Cheney on the U.S. energy situation.

Prime Minister Chrétien has clearly stated that we will ensure that a proper regulatory regime is in place in Canada to facilitate, amongst other things, the earliest possible movement of northern gas to southern markets, both Canadian and American, without sacrificing our own Canadian energy needs or our sovereignty. What is important for us, first and foremost, is the protection of our domestic supply, and we don't propose to do anything that would put that at risk.

In the Cheney report, we will be looking for a number of things—first of all, balance between the need to increase North American energy sources of supply and the need to moderate North American consumption. We need an emphasis on energy efficiency and energy conservation. These things are fundamental characteristics of an intelligent society, and they need to be given appropriate attention along with the supply issues.

We'll be looking for a progressive approach to the diversification of all energy sources, meaning, amongst other things, more renewable and alternative fuels and new technologies right alongside the more conventional sources.

We'll be looking for respect for Canadian needs and priorities, Canadian sovereignty and jurisdiction, Canadian regulatory prerogatives—including both federal and provincial prerogatives—and our Canadian commitments to sustainable development of natural resources.

Within that framework, we see significant future opportunity for Canada, tempered with prudence and common sense, opportunities for valuable new trade, jobs, economic growth, regional development, northern development, aboriginal advancement, technological sophistication, collaborative research and development, and cooperation on issues that pertain to the environment.

I want to make it clear that we are not talking about a common North American energy policy. Canada has and will continue to have its own energy policies based upon open competitive markets, fair and efficient regulation, and the principles of sustainable development. But we do believe we can expand North American energy markets to the advantage of both consumers and producers.

To continue to take advantage of market opportunities in both the U.S. and Mexico, the mechanisms are largely in place through the North American Free Trade Agreement. We are committed to competitive markets and fair regulation within our international relationships.

We will continue to act in Canada's interest. For example, we took steps to protect the caribou habitat in the Yukon, a move that, quite frankly, did not make us very popular in Washington or Dallas, but we will continue to oppose the notion of U.S. development in their ANWR, the Alaska Natural Wildlife Refuge, even though that may be a desired objective of the administration in the United States. We have opposed—and we will continue to make clear our opposition to—the disruption of the caribou calving grounds. We want to see the highest standards of environmental protection and enforcement in order to protect the health, safety, and heritage of Canadians.

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Our attitude on energy fits well with our overall commitment to the sustainable development of our natural resources, and our commitments, for example, under the Kyoto agreement to reduce greenhouse gas emissions. Climate change remains one of our biggest global challenges, and all nations have to work in concert together.

The $500 million we will be investing in our Action Plan 2000 on Climate Change, which supplements the $625 million previously announced in Budget 2000 for climate change initiatives, adds up to a commitment of $1.1 billion in climate-change-related action over the next five years.

Action Plan 2000, when fully implemented, is expected to take us about one-third of the way to our Kyoto targets, cutting greenhouse gas emissions in Canada by about 65 megatons per year during the period 2008 and 2012. All the steps we are taking under the national implementation strategy on climate change, approved by Canada's energy and environment ministers last fall—federal, provincial, and territorial—have been, and will continue to be, developed and carried out in close partnership with the provinces, the territories, the private sector, the academic community, non-governmental organizations, municipalities, and individual Canadians.

And there are certainly more steps to take. I don't want to underestimate the task remaining to achieve our emission-reduction commitments. It's going to require a great deal more effort. But at the same time we shouldn't forget that we have made some good progress and we have a very good base from which to do more.

During the 1990s, for example, our economy grew by about 30%, but our greenhouse gas emissions grew by only 13%. We have over 750 individual businesses that are active and committed members of the voluntary challenge and registry. We're setting realistic goals in reducing emissions. There's also a great deal of action on climate change being spearheaded by the Canadian Federation of Municipalities and their membership across the country, which we are helping to fund.

We do have good momentum on this issue and I believe we will ultimately achieve our targets.

Finally, Madam Chair, very briefly in summary, our natural resources sectors are large, they're a growing part of the Canadian economy, and they contain enormous potential for sustainable development and continued economic growth. They are world leaders in innovation. They're adopting high-tech solutions, from satellite technology to robotics. Our energy sources are no longer confined to one or two geographic regions or one or two traditional types of production.

Our energy relationship with the United States is big. It's very important to our future. We need to manage it carefully. To borrow a word from the current United States' President's father, we intend to be “prudent” in how we further develop that relationship.

We are using both our financial muscle and our intellectual muscle to do our part in meeting the great challenge of climate change. And we'll continue to be vigilant to ensure that we realize the enormous potential of all our natural resources in a way that is profitable, but also safe and sustainable for future generations of Canadians.

Again, Madam Chair, thank you for the opportunity to be here, and my apologies, once again, for being a little late at the start.

The Chair: Thank you so much. I'm going to try to stick very much to the time limits for each speaker, so we can get as many people asking questions as we can.

We'll start with Mr. Chatters for seven minutes.

Mr. David Chatters: Thank you, Madam Chairman, and thank you for appearing before the committee, Mr. Minister.

On the first round, I'll stay specifically with the estimates and the supplementary estimates. On the estimates, it would appear that your statutory spending is increasing in line with new statutory requirements and inflation. But I have some concerns with the little explanation in the substantive increases in grants and contributions and capital expenditures—capital expenditures some $25 million and grants and contributions $13 million.

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Specifically, there seems to be a reasonable explanation of some of the grants and contributions, but for example under the title Sound Departmental Management—whatever that is—you doubled the amount. It is curious that you appear to be giving your own department grants.

It seems curious to me, and I also had a couple of other specifics—

Mr. Ralph Goodale: Could you tell me the page you're referring to, so we can pinpoint that?

Mr. David Chatters: Pages 17-2, 17-3, 17-6 in the estimates, and then of course an extra $32 million in the supplementary estimates as well, the total there.

I'll let you catch up, because there were a couple of other program-specific things I wanted to get in, and I don't want to waste my time not saying anything.

Mr. Ralph Goodale: Mr. Chatters, I'll have my officials look up exactly the line item you're referring to here, because we haven't found it yet.

Mr. David Chatters: Okay.

Mr. Ralph Goodale: If we could just identify the precise item, we can get the explanation for you.

Could you move on to your next item?

Mr. David Chatters: You bet.

I'd like an explanation of the increases in the estimates for Atomic Energy Canada Limited specifically, and of an item called “Hibernia Interest Assistance” for $36 million. I'd like something on those, and also on Saskatchewan Power and the Maritime Electric Company—I suspect that's for the purchase of green power; please verify if that's the case.

That will probably cover my first round.

Mr. Ralph Goodale: Mr. Chatters, we'll get the internal departmental allocation for you momentarily.

Let me ask Mr. Ric Cameron, my acting deputy minister for the energy sector, to specifically address AECL and Hibernia, and then I'll come back to the wind power issue.

Mr. Ric Cameron (Acting Deputy Minister, Energy Sector, Department of Natural Resources): Mr. Chatters, with regard to AECL, there are three factors at play in the estimates.

One is the adjustment to recognize collective agreements and small elements within those; there is a small part of the growth.

In order to deal with Y2K information technology issues, they had been given a loan. There's a small reduction because that's being recovered. The significant part of the increase is for capital investment through a centrally determined Treasury Board process that allows organizations in need, including crown corporations, to deal with rust-out in their capital infrastructure.

This is targeted specifically to capital investment at Chalk River to deal with the management of the facility there, with a particular focus on making sure they can meet the standards imposed by the regulator for health and safety issues.

Mr. David Chatters: Basically it's for upgrading of the existing facilities.

Mr. Ric Cameron: Yes.

Mr. David Chatters: Okay.

Mr. Ric Cameron: Regarding the Hibernia Investment Fund, back when this was set up about a decade ago a provision was made for us to give some loan protection for private sector investors. In essence the fund covers up to $300 million, but based on the current profit scenario they're seeing, based on their cashflow, we've made a provision in case there is some uptake on this. These loans are repayable as well. This provision has been there since this was established a decade ago, and it's a provision against a borrowing. We don't know if that will take place, but based on the loan situation they have, that's what they could draw up to. But it is a repayable loan if it is drawn.

Mr. David Chatters: I'm a little confused over that one.

With the price of oil as it is now, it seems strange that Hibernia would require an interest assistance loan. If it can't meet its commitments with the price of oil where it is now, how was it ever going to meet it?

Mr. Ric Cameron: As I said, this is a provision. It is not certain they will draw it, but we've agreed to cover certain things in an agreement entered into a decade ago when the situation was somewhat different.

In essence this is a coverage against the contingency, and should it be drawn down, it would be repayable by the company.

Mr. David Chatters: Okay.

Mr. Ralph Goodale: Mr. Chatters, on the point about wind power, your supposition is correct. You'll recall in Budget 2000 a specific item of $15 million for the procurement of wind power by the Government of Canada for the operation of its own facilities—

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Mr. David Chatters: Was that in Calgary?

Mr. Ralph Goodale: No, this is in addition to the initial project we undertook in Calgary.

The pilot project in Calgary was very successful. We not only created our own market, if you will, by inviting the Calgary utility to procure wind power sources for some of the power the Government of Canada would need to operate its local facilities, but in addition to those governmental requirements, this green power was also offered by the utility to the general public. It found what everyone would probably regard as a surprising degree of uptake, even though there was a price premium attached to it.

Based on that experience, we're attempting now to expand market penetration elsewhere in the country, particularly in those jurisdictions that might have a more-than-average reliance on more carbon-intensive sources. We chose two provinces, both having that carbon intensity. One is Prince Edward Island and the other is Saskatchewan.

In the case of Saskatchewan, we have allocated a portion of that money to an agreement with SaskPower. They will procure a certain amount of power for the electrical requirements of Government of Canada facilities in Saskatchewan. If my memory serves me correctly, our objective is to cover 50% of our requirements from that source.

SaskPower has in fact let the contract, and it's interesting who won the bid: Suncor and Enbridge—an oil sands company and a pipeline company in wind power, which is an interesting turn of events. I understand that as they develop their proposal for how to do this in Saskatchewan, they will be looking for marketing opportunities beyond simply Government of Canada facilities; they fully expect to sign up additional customers. As well, a portion of the funding has been allocated to the wind power project in Prince Edward Island.

You're right, it's a specific line item from Budget 2000, $15 million, allowing us to expand our experience with wind power beyond Alberta to now include Saskatchewan and Prince Edward Island. Under Action Plan 2000 on Climate Change, we hope to go further than that.

The Chair: Thank you.

Mr. Cardin.

[Translation]

Mr. Serge Cardin: Thank you Madam Chair.

Good day Mr. Minister. We have not had as much time to read and analyze the document as your officials had to prepare it. This is perhaps unfortunate.

With respect to the 2000-2001 Main Estimates, you said, and I quote:

If our goal is to find better ways of dealing with environmental challenges successfully, and if we want to show people the way in terms of energy efficiency...

On page 20-8, energy efficiency is discussed. It can be seen that the contributions to support new broadened measures under the energy efficiency alternative forms of energy program have dropped from $13,231 million in 2000-2001 to $4.7 million in 2001-2002. This constitutes a rather significant drop under this heading, which may be described, for all practical purposes, as the energy efficiency program.

There are also other contributions to support energy efficiency programs which have dropped by only $300,000, but this too is nevertheless a relatively significant decline. How can you reconcile your comments about energy efficiency with these rather significant budget cuts?

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[English]

Mr. Ralph Goodale: Mr. Cardin, you raised an important point that requires an explanation. Quite a number of our program initiatives with regard to energy efficiency, energy conservation, the pursuit of renewable fuels and alternative fuels, and so forth are on a term basis, which means that at some point they have a specified expiry date. It is our intention and our expectation that those programs will indeed be renewed and that you will see the funding allocations for those renewals when you examine the supplementary estimates.

But our policy position is very clear: we need to increase our effort with regard to renewable fuels; alternative fuels; technological innovations, such as fuel cells; wind power; solar power; geothermal sources of power; biofuels, such as ethanol; and so forth. You may recall that in Action Plan 2000 on Climate Change, we committed ourselves to tripling the production of ethanol in Canada.

You're seeing only part of the picture in these main estimates. Because of the way the sunsetting works and the timing of the sunsetting for previous programs, the incremental financial commitment will appear in the supplementary estimates so that those programs will be carried on.

[Translation]

Mr. Serge Cardin: On page 8, with respect to the budget, there is discussion of investing in research and development to protect groundwater and surface water. Does this mean, Mr. Minister, that you are excluding any form of exports because you want to protect groundwater and surface water?

[English]

Mr. Ralph Goodale: The policy with regard to the bulk removal of water from Canada is, of course, within the purview of the Department of the Environment and the Department of Foreign Affairs. Questions have been asked in the House in the last number of days about the Canadian policy with regard to that, and ministers have made it very clear that we oppose the bulk removal of water from Canada.

We have, of course, legislation before Parliament right now to act upon the federal side of the jurisdictional authority, and the Minister of the Environment is working with his provincial counterparts to encourage provincial action where it is within their jurisdiction.

I would note, Monsieur Godin, that the position being taken by the Government of Quebec is very much consistent with the position of the Government of Canada.

Some other provinces have different views, but certainly our position is to oppose the bulk removal of water from Canada.

The item that is referred to in the estimates is to support the scientific work that Natural Resources Canada does, particularly on the issue of groundwater.

If I could use an example that's a very recent experience, I'm thinking here of the problems that were broadly reported with regard to the City of North Battleford in Saskatchewan and its water supply issue over the course of the last number of weeks. Under the infrastructure program, we have committed a certain amount of money, as has the Province of Saskatchewan, to assist the City of North Battleford in developing well water sources—in other words, groundwater from underneath the surface—so that as much as 80% of the water supply for the city of North Battleford can come from groundwater, which would have quality advantages as well as cost advantages, rather than drawing a substantial amount of their water supply in raw form from the North Saskatchewan River. The North Saskatchewan River, obviously, is a collection of surface water. In this particular case groundwater could well be a better alternative for the future of the City of North Battleford.

But in terms of the science that goes into groundwater in Canada, Natural Resources Canada has an important role to play, and funding in the estimates supports that intellectual capacity so that we know and understand as much as we can about Canada's very precious groundwater resources.

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[Translation]

Mr. Serge Cardin: I would imagine that I still have some time left.

[English]

The Chair: No, you don't. You're right at seven minutes.

[Translation]

Mr. Serge Cardin: We will return to this.

[English]

The Chair: You did very well.

Mr. Keddy.

Mr. Gerald Keddy (South Shore, PC): Thank you, Madam Chair.

I'd also like to thank the minister and his colleagues for appearing before the committee.

Since my colleagues to the immediate right have stuck to the estimates, I will leave the estimates alone for a bit.

You spoke about the concept of some type of North American energy policy and certainly a Canadian energy policy. The Americans appear to think it's urgent to get oil and gas out of Prudhoe Bay into American cities.

I heard you a few days ago on Newsworld, I think it was, discussing that very fact and two pipeline routes. I'm puzzled, because a pipeline route in Canada was brought in in 1979 under Mitchell Sharp, I think, and the eventual production of Prudhoe Bay would come down the Alaskan highway and through the Yukon. That route has already been approved. There's a bidder. It's a very generous contract, which allows even the pipe to be manufactured in Canada. Yet you were discussing a possible undersea pipeline from the Beaufort Sea and down the Mackenzie Valley. No land claims have been settled, and it would probably take a minimum of eight to ten years to conceive that. Is there a choice, or is there something we're going to move on?

Mr. Ralph Goodale: There are a number of issues here, Mr. Keddy. First of all, let me just restate this very clearly for the record. You used, I think inadvertently, a reference to a North American energy policy. That is not the goal and objective of the Government of Canada. We are looking to the expansion and successful functioning of North American energy markets. Policy is the prerogative of Canadians, and we will make sure that policy continues to be Canadian.

On the issue of the pipeline or pipelines, there are very extensive natural gas reserves in the Prudhoe Bay area off the coast of Alaska. There are also very significant gas reserves in the Mackenzie Delta and in the Beaufort Sea. There are groups of producing companies and exploration companies that are presently at work in both of those gas fields exploring the potential. At some stage—and a lot of people think that will be sooner rather than later—that gas will need to be moved into the marketplace in southern Canada and the lower 48 states of the United States.

The way the system works is the gas producers themselves, when they consider it appropriate, will make the application for the transportation system, if you will. They are still very much in the analytical stage. There may or may not be one or more applications coming before regulatory authorities later this year or sometime next year. That's entirely in the hands of the private sector. They will get their teams and partnerships together, and when they're ready, they will serve notice and file an application or applications. There certainly could be more than one.

One of those applications may be to follow the Alaskan highway, another may be down the Mackenzie Valley, and another may be the so-called over-the-top group, which would come from Prudhoe Bay offshore to the Mackenzie Delta and down the Mackenzie Valley. There are a number of different alternatives.

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Whether or not the alternative for which an application is actually filed coincides exactly with the scenario that was laid out 25 years ago, with the proposal that was current at that time, remains to be seen. It will be up to the producing companies to decide what they're going to apply for. I think it's far too early to even speculate about that, because the companies have a lot of work yet to do.

Mr. Gerald Keddy: I have another quick question, if I may, because our time is limited here.

Two-thirds of the pipeline is already built; it's the final third that needs to be built. The environmental assessments are done. A lot of it's done on the one route. That wouldn't preclude work taking place on the Mackenzie Valley route as well.

In your estimates you talk about forest inventory. I don't have them in front of me right now, but have we done anything with forest inventory? Do you work in conjunction and dovetail with the provinces, so we know exactly what the provinces have? I know for a fact in Nova Scotia that there are no current numbers. I think the last year they really had current numbers was probably 1997 or 1998.

Mr. Ralph Goodale: Mr. Keddy, this is essentially a provincial responsibility.

Mr. Gerald Keddy: Yes. Understood.

Mr. Ralph Goodale: One of the things we do need is substantial information-sharing and collaboration among various jurisdictions, to ensure that we're all operating on the same information base and have accurate and up-to-date information.

I would like to ask Dr. Yvan Hardy, who is the senior official with the Canadian Forest Service, to describe briefly the way in which the CFS relates to provincial jurisdictions in this collection of inventory data, and also perhaps to describe very briefly what the Canadian Council of Forest Ministers is working on in respect of information systems for the future for the status of Canadian forests.

The Chair: You've gone over your seven minutes. Does everyone want Mr. Hardy—

Mr. Yvan Hardy (Assistant Deputy Minister, Canadian Forest Service, Department of Natural Resources): I'll be very quick.

The Chair: Okay.

Mr. Yvan Hardy: Thank you, Minister.

I believe, Mr. Keddy, you are already familiar to an extent with the Canadian Council of Forest Ministers. There are two major initiatives. One is called the national forest inventory, which is current right now and in which there's an agreement to share information between provinces and the Government of Canada, in order to be able to have as current as possible forest inventories for the country.

In parallel to that, again through the Canadian Council of Forest Ministers, there's a new initiative called the national forest information system, which will be an upgrade of what's already being done in forest inventory per se, but will be an add-on too in respect of other forest values, wildlife habitat, for instance, and so on. We're coming to the end of phase one out of three phases.

There's going to be a meeting of the deputy ministers of CCFM first thing in June. The report will be made there. My expectation is that the deputies will instruct people to move forward in preparation for the September meeting of the ministers.

The Chair: Thank you, Mr. Hardy.

Mr. Godfrey.

Mr. John Godfrey: Thank you, Minister. It's good to see you again. If this were that show This Hour Has 22 Minutes, this would be the part called “Talking to Americans”.

There's an absolutely heart-rending story on the front page of the Globe today about a family in California. I was absolutely moved to tears. They have no air conditioning for this lady and her five children. They're not allowed to watch television any more, because of the energy crisis. They're gathering around a single light at night to read. The kicker, the part that really just overwhelmed me, was that it's now got to the point where she may have to consider selling her Lincoln Navigator sports utility vehicle.

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So I guess I've got two points. I'm interested in plans and priorities. Your vision statement says that Canada must become

the world's “smartest” natural resources steward, developer, user and exporter—the most high-tech; the most environmentally friendly; the most socially responsible... leading the world as a living model of sustainable development.

Are we being a smart natural resources steward, a smart exporter if we're selling non-renewable resources to the United States when they're not taking care of those resources properly? We're sustaining their profligacy, or as they'd say in the Bible, we're selling our birthright for a mess of potage.

I've just gone through the recommendations that came out of the new National Energy Policy Development Group in the United States. It's interesting that there is not one reference in the so-called conservation chapter to any form of regulation on fuel efficiency. The only thing you can see is a slight kick towards temporary subsidy for hybrid fuel vehicles. So how can we be describing ourselves as a smart exporter if we turn a blind eye to what they're doing with resources that are not going to come back? That's the first question.

Mr. Ralph Goodale: Well, if I could—

Mr. John Godfrey: I'll just give you the other one and then you can...

Mr. Ralph Goodale: Okay.

Mr. John Godfrey: There's only one reference in all these recommendations to global warming, and it's a pretty limited one. Yet if we're concerned about global warming and we're concerned about—not using the policy word—the North American conversation, or whatever you want to call it, since there's a clear connection between our energy exports and the production of more greenhouse gases, the classic case being the tar sands, where I guess it's methane that is the big product, how do we get out of that connection, if in order to get greater exports to the United States we have to produce more greenhouse gases, which have to appear on somebody's account book under the Kyoto agreements? It is not less, it is more, and it's more because of their profligacy.

Over to you.

Mr. Ralph Goodale: Thank you very much. I'm delighted to answer those questions.

First, I want to assure you that I, my department, and the government take that mission statement you quoted seriously. It was developed in the very early days that I was in this portfolio. It's been our guiding principle ever since. I would also note that the principle of sustainable development is embedded in the legislative mandate of Natural Resources Canada. It is the operating principle for the department. We have no intention of turning a blind eye.

As I said in my opening remarks, and perhaps too briefly, in the growing energy relationship we have with the United States we will very much be looking at issues like energy conservation, energy efficiency, renewable sources, alternative sources, new technologies—fuel cells, for example. We want these to be very much a part of the overall mix. I think we've already sent some pretty unsubtle messages to the United States that they ought not to be dismissed.

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It was a comment that was perhaps taken out of context—the so-called six-second clip that you sometimes see on television. I do recall an occasion recently when the Vice President was quoted as saying that conservation is a personal virtue. It was interpreted from that clip that he was being dismissive of conservation. I don't know whether the clip got it right or it was taken out of context. In any event, from the Canadian perspective, conservation is not to be dismissed. Energy efficiency is not to be dismissed. The pursuit of renewables and alternative fuels is not to be dismissed. We will pursue them aggressively. They are very much a part of the policy position of the Government of Canada.

On your point about fuel efficiency in vehicles particularly, I think that's a good point, and it is referred to specifically in the Government of Canada action plan on climate change. We want to sit down with automakers and with our U.S. counterparts to develop a new set of fuel efficiency standards that we can perhaps move forward on as early as 2004, so that they will begin having the desired impact in the marketplace by the Kyoto implementation period between 2008 and 2010.

If you look at the basic vehicle that's on the road today, compared to its counterpart of 25 years ago, there will probably be a comparison between the two vehicles, the new and the old, that shows a 25% to 30% improvement in that vehicle today, as compared to its predecessors. The automakers tell us that further improvements are indeed possible, but, obviously on an issue like vehicles in the North American context, you do need to have North American consistency because of the way the marketplace works in vehicle trade on this continent. But fuel efficiency, specifically in relation to vehicles, is a part of our agenda, it is consistent with that mission statement you referred to, and we will continue to pursue it.

On the issue of the oil sands, I'm very happy to report that in addition to the technology investment I mentioned in my opening remarks—the technology investment made by the Government of Canada, in partnership with the private sector and a great many other players—not only have we opened the way for about $51 billion in new capital investments with respect to the oil sands, but we have also contributed to the fact that the production cost, which at the outset of the oil sands was probably in the order of $30 a barrel for a barrel of synthetic crude, has been reduced now to something more in the range of $12 or $13 per barrel. So there has been a very significant production cost decrease that has been made possible by new technology.

Secondly, that same new technology has reduced the environmental footprint by 25%. There is going to have to be a significant, continued investment in such environmentally friendly technologies so that we can reap the enormous economic benefit from the oil sands, and do so in a way that is increasingly friendly to the environment.

One of the technologies that should be examined with great care—and it's coming along, but it needs further work—is how to capture the CO₂ right at source, before it is emitted into the atmosphere, and find a way to sequester it underground. If that technology with respect to a facility like the oil sands can be perfected—and I believe it can be—we'll take an enormous economic, environmental, and technological step forward. We can then find the way to extract the synthetic crude without the emission of the carbon dioxide. There's work going on in that regard right now.

The Chair: Minister, we're now going into our three-minute round.

Mr. Chatters.

Mr. David Chatters: Thank you, Madam Chair.

I'll still need an answer to my question in the last round on the grant to your own department for sound departmental management.

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Mr. Ralph Goodale: Mr. Chatters, it's a fairly technical explanation. Could I suggest something? I will write to you with the details on it.

Mr. David Chatters: Good.

Mr. Ralph Goodale: Madam Chair, I will make the letter available in both languages for the information of all members of the committee.

Mr. David Chatters: I'm going off the estimates and on to some of the other discussion.

You outlined pretty specifically what you want to see in George W. Bush's and the Vice President's announcement, and you are pretty specific about negotiating hard on those initiatives. First, are you prepared to restrict Canadian exports to make the point, to get those things that you want to see in an announcement there? Second, will you, as the Canadian government, ensure access to natural gas and natural gas liquids passing through Canadian territory in any agreement on any pipeline?

Mr. Ralph Goodale: Mr. Chatters, those are both very important points. I would say it's still very early days in this process. Vice President Cheney's report is only available as of a couple of hours ago, and we are in the process of analysing it thoroughly.

I take an optimistic view about how the relationship between Canada and the United States can unfold. We have some important imperatives here, and as that relationship further develops—it's already pretty big—we will be taking every opportunity to advance the points that I have mentioned here today. They'll come as no surprise to the U.S. administration. Energy Secretary Abraham and I have had some of these discussions already.

By working constructively together, we can enjoy the economic developmental opportunities that will be very good from a macro-Canadian economic point of view. At the same time, we can advance that agenda on sustainable development, essentially, that is fundamentally important to Canadians.

In terms of the pipeline and the spinoffs that come along with pipeline development, I have to say that, as much as I may be tempted, it would be inappropriate for me, as the minister responsible for the National Energy Board, to comment in advance on a hypothetical that has to do with what may be the potential details of an application. But let me say broadly that, clearly, we want to maximize economic advantage in Canada. Beyond that broad principle, though, I should probably not wade too far into the detail. But, clearly, from our Canadian point of view, if there is to be this kind of development, we want to see Canadians winning from that development.

Mr. David Chatters: That's a better answer on the second question.

Thank you.

The Chair: Thank you.

Mr. Finlay.

Mr. John Finlay: Thank you very much, Madam Chair.

Thank you, Minister, for all your information today. I'm going to follow up on climate change and our Kyoto achievements. You say the Action Plan 2000 on Climate Change, once fully deployed, will enable Canada to achieve one-third of its emission reduction objectives during the undertaking period.

Mr. Minister, are you in a position to sketch out for us the other plans for achieving the remaining two-thirds of Canada's greenhouse gas emissions reduction objectives?

Mr. Ralph Goodale: Mr. Finlay, when the energy and environment ministers, federal, provincial, and territorial, got together for our last major meeting last fall, we laid out our national implementation strategy and our first business plan, which covers the next five years. From the federal point of view, it involves an investment of $1.1 billion, and the provinces have offered and continue to offer details on what they will be contributing to the game plan. We believe that gets us more than one-third of the way—I think one-third is the minimum—to reaching the Kyoto obligations. There will be subsequent business plans brought forward approximately every twelve to eighteen months, depending on the timing of the meetings of the environment and energy ministers.

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In responding to your question, I'm speculating a bit about what will be in those future business plans. As you know, this is a very arduous process of discussion with provincial and territorial governments, to move this file along. So I hope my speculation doesn't move that process off track.

But I would see a continuation and expansion of a number of the initiatives that are in the current climate change action plan. You'll notice that some of them are in the pilot project category. As they prove themselves out, they may become permanent parts of policy, provincially and federally. So there are many things in this first action plan that I think will be continued and expanded upon.

Secondly, I think we have to examine the extent to which incentives, particularly incentives in the tax system, can be applicable to our objectives here. I note that is something that is referenced in Vice President Cheney's report—a focus on selective tax incentives to encourage certain kinds of behaviour.

There are areas we will have to analyse and test for their cost effectiveness. One never wants to overburden the tax system; indeed, we should be seeking to make it simpler. But there may be specific areas where an incentive of one kind or another, either a tax incentive or some other form of incentive, could be put in the system to encourage certain types of activities that have a particular environmental benefit attached to them.

Thirdly, there will need to be, it seems to me, a number of targeted measures that can lead to some big-ticket reductions. Let me go back to the example I used just a moment ago.

If we can develop the technology for the collection of CO2 at source, when you're dealing with a major CO2 emitter, like the processes that go into the tar sands, it could be a major step forward for us in achieving the objectives. So a series of targeted measures will be required.

Fourth, we will need the successful conclusion of the international discussions that are now underway. Let me say how critically important it is for all of us to work in a constructive way to get the United States fully engaged at that table.

The United States, after all, accounts for 25% of the world's emissions. So if you're going to have a comprehensive global solution to an issue like climate change, you can hardly achieve that in the absence of the United States. There's such a huge hole in the paradigm that it's very problematic. We have to work to get the United States back into the discussion here.

We will need, in those discussions, proper commercial access to the Kyoto implementation tools; access that is not belaboured with administrative costs that make them economically inefficient. When I refer to the Kyoto implementation tools, I'm thinking of emissions trading, joint implementation projects, and the clean development mechanism.

We will also need the proper definition and inclusion of carbon sinks in both forestry and agriculture, based upon sound science—I underline that. Canada is not looking for some back way out of our climate change commitments. Where science verifies that sinks activity is removing a ton of carbon from the atmosphere, under the terms of the Kyoto Protocol that's legitimate, and we need to get it calculated in the right way.

So the proper conclusion of the international implementation framework is important to us.

Finally, we will need—as the private sector has urged—to consult broadly about domestic instruments, such as domestic emissions trading. It has been raised by a variety of business organizations in various parts of the country that the solution must be economically efficient, market-based, competitive, and common sense.

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We are in the process now of beginning even further consultations with the private sector about how such an approach might be structured to facilitate domestic emissions trading. Of course, if you had a trading system nationally within Canada, you would need to examine very closely how that might dovetail with an international emissions trading system, because the two would have to be compatible.

The Chair: That was like the seven-minute round one, so we'll have to try to get everyone in. I know your questions are all very important, but Mr. Cardin, Mr. Cuzner, Mr. Keddy, and Mr. Godfrey still want to ask questions.

Mr. Cardin.

[Translation]

Mr. Serge Cardin: Thank you Madam Chair. You claim that you are not trying to duck your responsibilities when you say that Canada wants to achieve its objectives at lower cost, and when you speak about a national strategy, for wells and various other factors. I nevertheless have fears, particularly when I read on page 35, and I quote:

...NRCan will focus its action over the next three years: climate change study; introduction of innovative technologies and programs in all sectors of the economy; adaptation to climate change.

I am afraid when I see that word. It makes me think of a doctor telling a patient who is very ill to go and see a psychologist. It will not cure the patient, but perhaps make it possible for the patient to live with the illness.

When I read the expression “adaptation to climate change” I am afraid that all these nice words, people will become less and less afraid of climate change and their eventual repercussions and that in the end nothing will really change in terms of climatic conditions.

Since we do not have much more time, I wish to return to your reply to a question from Mr. Keddy. I heard some things that I liked, such as the expression “respect for jurisdictions”. I also heard some discussion, but worded in another way, of overlap with the provinces. This makes me think of what I read on page 42 of the document. The issue there is recycling. There is discussion of a national recycling strategy.

I know that in my region in particular, in Sherbrooke, for example, a very respectable level of recycling, composting and recovery has been reached. There is discussion of respect for jurisdictions. Will the government invest money and allow people to work the way they are already working, with the specific techniques and resources that they have developed or, as we can see elsewhere in the document, will there be people, through the liaison office, wandering all over Canada on all kinds of pretexts to invade provincial areas of jurisdiction?

Roughly, those are my comments, and of course the underlying issues.

[English]

Mr. Ralph Goodale: On the issue of adaptation, this is adaptation within the context of climate change. This is simply a case of prudence and common sense. As hard as we are all working on climate change mitigation, that is, reducing the level of greenhouse gases and thereby mitigating the consequences of climate change, all of the best scientific opinions, and indeed the Kyoto Protocol itself, recognize that you cannot mitigate all of it; there is some amount of climate change that is inevitable, and indeed has already happened.

Accordingly, along with that effort to mitigate, you also need an effort to adapt. That was very clear in the advice we received from the 450 Canadians who were involved in our issue tables process that led to the national implementation strategy.

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We have had special efforts underway for a number of years now on the science of adaptation. We have provided incremental funding in our action plan to continue that effort, because as hard as we will all try to mitigate to the maximum extent possible, adaptation will unfortunately also be an imperative we will have to deal with.

On your point about federal-provincial relations, one of the things that very much impresses me about the people who work at Natural Resources Canada is the very strong and positive relationship they have with their provincial and territorial counterparts. I think Natural Resources Canada works very hard to foster those good relationships with provinces, territories, and other stakeholders in the private sector. They operate in the department clearly within federal jurisdiction, taking our federal responsibilities very seriously, making sure we deliver on them, and trying very hard not to intrude upon provincial jurisdiction.

Where there are grey areas, I'm happy to say that for the most part the officials are able to get together and work them out in a collaborative, constructive way. So in terms of this department, the relationship, whether it's on an issue like forestry, recycling, mining, energy, sciences or whatever, in terms of federal-provincial-territorial rapport, is very positive and we want to keep it that way.

The Chair: Thank you, Minister.

Mr. Cuzner has been waiting here a while to ask his question.

Mr. Rodger Cuzner (Bras d'Or—Cape Breton, Lib.): Thank you, Madam Chair.

Mr. Minister, as you know, I represent one of the areas that were most impacted by the DEVCO closure, and it signified the end of 30 years of federal involvement in the coal industry in Cape Breton Island.

Just in conversation with some of the committee members throughout the day here, I think it's recognized that the corporation was given every opportunity to attain commercial viability, and the sale was pursued actively and given every chance to succeed.

Before I pose the question, I certainly know that you, personally, and your staff recognize the economic impact the industry has had on the area. Certainly your support for the economic development package is greatly appreciated, and I want to go on record as thanking you for your support with that.

It may be worthwhile to share with the committee members, though, what assurances have been put in place to make sure the displacement of the workforce is addressed and there's equitable treatment of the workforce.

Mr. Ralph Goodale: First of all, let me say that I understand very well the kind of impact the announcement we made yesterday will have upon a region of the country that is very much your home. It was not an easy decision for anyone to make, nor for the people in Cape Breton will it be an easy decision to accept. So we all need to work very well together to make the best out of what is a difficult predicament.

Part of that will be the human resources strategy to deal with the people in the workforce who will be losing their jobs. We have asked DEVCO's management to sit down immediately, hopefully no later than beginning tomorrow, with all of the representatives of the unions to work out a fair and appropriate human resources strategy and package.

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I'll be very anxious to follow those discussions with care to see how they are going along. Of course, there is some recent experience, not more than a year or a year and a half ago, in dealing with the closure of the Phalen mine, and I think drawing upon that background the parties can come to some realistic conclusions. I hope they can do that quickly so that the people affected in the workforce will know very soon where they stand. The objective is to have a human resources strategy that is fair and appropriate in all circumstances.

In addition, I should mention that there is of course the economic development funding that you and your colleague, Mr. Eyking, worked very hard to achieve. It is intended to help Cape Bretoners turn the page to a better future, to find that economic base that will be solid and successful for the long term. Already some of that economic development funding that has been in place now for a little while has generated enterprises that employ over 1,300 people. I understand from the people at ACOA and at ECBC that they anticipate further announcements, perhaps in the very near term, that could add to that employment base.

We have to make sure this money is well invested so that we're not achieving just short-term satisfaction but long-term transformation that will provide the people of Cape Breton with a future they can rely upon.

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

Mr. Keddy.

Mr. Gerald Keddy: I have two questions. You spoke earlier about selective tax incentives. We've asked for selective tax incentives in the forestry sector for some time and have never been able to get them. I would question if it's easier to do it in the energy sector than it is in the forestry sector, because there's certainly good reason for selective tax incentives, especially on private land management, in order to amortize profit—that's a windfall profit once every 50- to 80-year cycle—and to amortize some of your expenses against that. That's the first question.

The second question comes out of Mr. Cuzner's remarks on DEVCO. With the package that's been offered and the eventual wrapping up and hopefully the sale of the Prince Colliery, if there's not a sale for all of the DEVCO assets, have you looked at selling the remaining assets piecemeal? Certainly there was a lot of interest a year ago in the coal pair. There is a lot of interest, at least there was then, in the Prince Colliery, separated out from Phalen, and some of the other DEVCO assets as well, but in a piecemeal process. Have you looked at that?

Mr. Ralph Goodale: Mr. Keddy, we did of course a worldwide search for prospective purchasers of the Prince mine per se as an ongoing operating entity. We found, quite frankly, that the short list for those who were genuinely interested was very short. After pursuing extensive negotiations with the two parties that were prospective buyers, DEVCO concluded that a satisfactory transaction could not be achieved. In terms of Prince per se, I believe the search has already been completed, and unfortunately it was not successful.

With respect to some of the other assets, the surface assets in particular, the effort to sell them in the private sector will continue, and DEVCO's management is very positive about their chances of being able to do that. Mr. Shannon was asked yesterday at one point—Mr. Shannon is the chairman of the DEVCO board—whether there was a good prospect for disposing of those surface assets. He indicated there were such prospects.

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So I think in terms of those sorts of assets, yes, the effort will be continued, although it clearly is DEVCO's preference that they be disposed of as an entity and not bit by bit and parcelled out in little chunks. They believe they can dispose of them in a satisfactory manner, altogether at once.

On your point about tax incentives, there are obviously some competing objectives here. We need to find the means by which to encourage certain behaviour on the part of Canadians that is energy efficient and is in the category of energy conservation. Let me commend those various Canadians who are already doing it, but we have to achieve a greater degree, if I can put it this way, of market penetration—more of it.

There are various ways you can do that. Sometimes it's a cash incentive; sometimes it's a tax incentive. We will need to have very careful discussion with the Department of Finance to determine what is the most cost-effective and economically efficient way to achieve the desired result.

A tax incentive may be the way to do it. There may be other techniques. In terms of the tax system, obviously one of the virtues the Department of Finance would be looking for, in terms of tax policy, is clarity, simplicity, and fairness.

We need to try to achieve all of those things at once.

The Chair: I have two more speakers and I know we're going to possibly run out of time.

Mr. Gerald Keddy: You're too strict, Madam Chair.

Mr. Ralph Goodale: She's mean.

The Chair: So Mr. Godfrey, then Mr. Chatters.

Mr. John Godfrey: I have two questions, Minister, and these two questions represent a follow-up to the last thing you said.

First is the question of vehicle efficiency, and you quite rightly pointed out that those things called automobiles have got more efficient over time. You failed to mention that there has been a migration away from those things called automobiles into a category called light truck, known as SUVs or minivans, which has caused the entire energy efficiency movement to go astray because people have been migrating. Over 50% of all new vehicles are now light trucks and not subject to the same regulations.

So in order to encourage energy efficient Canadians to make the right choices, are you actively planning some kind of measure to put an end to that kind of migration? That's the first question.

Secondly, on the oil sands, while it's true that you've had a 24% reduction of greenhouse gases as a result of production processes, of course you leave 75% behind. It's also true that it may be the case, eventually, that you'll be able to capture CO₂, although as I understand from talking to folks about that, we're not there yet.

In the event that does not come in on time, and we're forced to make the following choice between exporting more to the United States of that particular form of energy, and satisfying our Kyoto agreements, do exports come ahead so that we swallow the costs—that is to say, on our books—for emissions? Or do we say, no, we're less interested in the money, and then you'll have to take the charge on your books for the greenhouse gases associated with the production of oil sands if we don't get the capture we all hope for? Those are the two questions.

Mr. Ralph Goodale: On the latter point, Mr. Godfrey, it is a complicated issue that you can't quite calculate on the back of an envelope. But I believe we do need to visit this question of where the carbon credit and the carbon debit fall.

Let me give you another example. When we export clean Canadian natural gas to the United States, and that gas is used in an electricity plant that was previously using coal, there's a conversion from coal to gas. Canada presently accrues the debit of the greenhouse gases that are associated with the production of the gas.

Compared to other sources of energy, that's a relatively small debit because the natural gas is a clean source, but we accrue whatever debit there is.

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The United States gets the credit for having moved from coal to gas. It's our position, and the Prime Minister has said this clearly in the House, that there ought to be a little bit of sharing here. The clean resource we supply replaces the more carbon-intensive process in the United States. We get all the disadvantage and they get all the advantage. So clearly this discussion about carbon credits is going to be a part of our dialogue with the United States.

On your first point about the shift in consumer behaviour to favour more of the so-called SUVs, clearly that has been a truly enormous phenomenon of the late 1990s. There are some SUVs that are in the fuel-efficient category, if, for example, they run on some alternative fuels like natural gas. If I remember correctly, the RCMP vehicles used for surveillance in Stanley Park in Vancouver are all on natural gas. They are these rather humongous vehicles but they are on an alternative fuel, which makes an important difference.

How to incent the right behaviour is in fact a complex set of things. I would prefer, quite frankly, to put our emphasis on positive incentives that can bring us to the right conclusion in terms of outputs. The range of things that will be required to encourage that is the sort of thing that will be involved in these discussions between federal, provincial, and territorial ministers.

The statistics on SUVs are particularly outstanding statistics. They are going to have to command the attention of policy makers in terms of their environmental impact. The exact matrix of what policy positions will be remains to be seen, but you're right to flag the issue.

The Chair: Mr. Chatters, you had a question.

Mr. David Chatters: Yes, perhaps the switch to SUVs has something to do with the deteriorating road infrastructure in some parts of the country.

Mr. Ralph Goodale: Don't get me started on that.

Mr. David Chatters: I want to ask you a question, Mr. Minister, that is asked of me often, and I have some difficulty answering it. With your reputation for being able to answer anything, I want you to help me answer that.

There's a growing sense in this country, as gasoline prices rise to record levels, that we have already in fact devolved some of our sovereignty in energy to the United States, because our energy certainly is priced on the North American market. It's priced in U.S. dollars.

There's public resentment out there that we in Canada, with our abundance of energy and natural resources, are being punished because of the shortage of energy in the United States. There's resentment that we have to pay the huge amount of exchange on the Canada-U.S. dollar, because our energy is in fact priced in U.S. dollars and we have to buy it back, in a sense, in U.S. dollars. So how do you answer Canadians when you get that kind of accusation and concern in fact with energy prices?

Mr. Ralph Goodale: Mr. Chatters, part of the answer, at least, is that petroleum product prices are to a very large extent not driven only by North American circumstances but also by global circumstances. In fact, between Canada and the United States we have the two lowest prices for petroleum products in the world. If you look at the price in Japan, or in any country in Europe or in Latin America, you'll find the price the consumer pays there is sometimes many times higher than the price we pay here, even though we consider our price to be too high as it is. Certainly in terms of recent experience it's been fairly painful.

The big factor that has influenced the international price for crude in the last 18 to 24 months, of course, is the rebound in some economies in the world. The Asian flu is over; the Asian economies are recovering. There are some very powerful growth rates in Latin American as well as in Europe and in North America. So what used to be a slump in demand for global energy just a couple of years ago has all of a sudden become a very much increased demand.

And with that increase in demand, compared to supply, we have also had the conduct of OPEC, which has intervened in this marketplace as a cartel, perhaps more effectively than OPEC has ever done in the past.

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The biggest single component in price changes in the last year and a half has been the international price of crude, which is determined in large measure by factors and forces outside of North America. The refining margin has changed, but just a little; the tax impacts have changed, but just a little. Those are pennies a gallon, a very small amount.

In terms of the relationship with the United States, if we are able to both increase and diversify our sources of supply in the North American context and couple that with an important emphasis on conservation and energy efficiency, we can take a substantial amount of pressure off ourselves. That kind of conduct in our continental neighbourhood can help us all get through what is a very difficult period in terms of consumer prices.

I would put those three things together in a package. Increase supply as much as we can on the consumption side of it in terms of efficiency and conservation and work on the diversification of our energy sources so that we have more arrows in our quiver than just one or two. That will help us get through this as well as we possibly could.

On an international comparison, those prices in Canada and the United States are the two lowest price sets in the world.

Mr. David Chatters: I doubt that would satisfy our consumers.

Mr. Ralph Goodale: I understand.

The Chair: Thank you so much. It brings us to 2 o'clock. I'm very pleased at the number of questions we were able to put in.

Thank you, Mr. Minister, for coming before us today. I'm sure we shall see you again.

Mr. Ralph Goodale: Thank you very much, Madam Chair. It's always a pleasure.

The Chair: The meeting is adjourned.