[Recorded by Electronic Apparatus]
Thursday, April 25, 1996
.1119 
[English]
The Chairman: I'd like to call this morning's meeting to order. We will be having our first of two meetings on the estimates. Today we will be hearing from officials from the department, and then on May 1 we will be hearing from the minister.
I'd like to welcome Jean McCloskey, the Deputy Minister for Natural Resources, who will be leading the presentation. I understand you have a number of officials you would like to introduce. Please proceed.
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Ms Jean McCloskey (Deputy Minister, Department of Natural Resources): Thank you very much, Mr. Chairman. I will introduce Mr. Michael Cleland, Acting Assistant Deputy Minister for the Energy Sector; Mr. Ron Sully, the Assistant Deputy Minister for Mines and Metals;Dr. Marc Denis Everell,
[Translation]
who is Assistant Deputy Minister, Earth Sciences Sector; Mr. Yvan Hardy, who is Assistant Deputy Minister, Canadian Forest Service;
[English]
and Mr. David Bickerton, who is the Acting Assistant Deputy Minister for Corporate Services for the department.
I appreciate very much this opportunity to appear before the committee to discuss the main estimates of the Department of Natural Resources.
[Translation]
I'm sure committee members are familiar with the mandate of the department, namely to promote the sustainable development and responsible use of Canada's mineral, energy and forestry resources; and to contribute to the wise management of Canada's land mass through the application of sound science and technology.
[English]
Natural Resources Canada is the science and policy department. About three-quarters of our budget is devoted to resource-based science and technology, which we believe is crucial both to our environment and to the economy. The department is playing a significant role in realizing the federal government's goals of reducing the deficit, revitalizing the economy, contributing to jobs and growth and improving the efficiency of the federation.
Between 1995-96 and 1998-99 the department's budget allocation will be cut in half, from $841 million to $421 million. This is the result of program review, which as the minister previously mentioned to you involved a fundamental rethinking of the federal role in Natural Resources. Program review resulted in a renewed mandate to focus on science and on policy.
We have four strategic directions in the department. The first is to promote the sustainable development of Canada's energy, mineral and forest resources. The second is to maximize the contribution of science and technology by advancing scientific knowledge, by developing and transferring technology and by formulating policies that reflect government priorities. The third is to promote international competitiveness and environmental stewardship in our resource and related sectors. The fourth is to enhance existing partnerships with science and stakeholders, including the provinces and aboriginal peoples; to build new partnerships; and to improve the efficiency of the department.
It's a large agenda, especially in view of our resource reductions, but we are determined to achieve both our spending targets and our goals.
[Translation]
Ladies and gentlemen, this is a big agenda, especially in view of the required reductions in spending, and the department is determined to achieve its spending targets and its goals.
I would like to highlight a few of our key initiatives over the next three years.
A principal means of pursuing sustainable development is to improve energy efficiency. Natural Resources Canada will work with the provinces and municipalities to encourage wider adoption of energy-efficient investments in government facilities.
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Our Federal Buildings Initiative has demonstrated how such investments contribute substantially to our environment and our economy, at no cost to the taxpayer.
[English]
Ladies and gentlemen, we are addressing the issue of climate change by such initiatives as advancing new energy technologies and the climate change voluntary challenge and registry program, which encourages Canadian organizations to register publicly action plans to limit or reduce greenhouse gas emissions.
In science and technology we're proceeding with a detailed action plan as part of the federal government's review of science and technology. The department will concentrate its S and T activities in areas that contribute to the national economy, to the environment and to the social values of Canadians. We are implementing a science and technology management framework that we believe could serve as a model for other science-based departments and agencies. The goals of the framework are to emphasize our focus on our clients, to enhance our accountability for the resources entrusted to us and to further improve the management of S and T in the department.
Canada has a leading role both in international competitiveness and environmental stewardship for the resource sectors. We're all aware of the extraordinary mineral discoveries such as Voisey Bay, which have marked a resurgence in mining in Canada. With science and policy initiatives, the department will continue to support the discovery and sustainable development of minerals and metals. By doing so, we contribute to economic growth and the international competitiveness of our mining sector.
We will also advance federal interests in forestry, another industry increasingly affected by global competition. Next year the United Nations Commission on Sustainable Development will conduct a review of forestry practices. At the crucial stage of preparatory work, the department will champion Canada's positions.
In mining, energy and forestry, the department will contribute to job creation by pursuing improvements to our investment climate, in particular through regulatory reform and harmonization; supporting the development of advanced products and services; facilitating the rapid growth of information technology; and promoting the development and use of energy-efficient technologies.
Partnerships are key to these goals. We're establishing new partnership networks for research in all three sectors. We're building closer, more cooperative relationships in resource development and land management with provincial governments, clients and other stakeholders, including aboriginal peoples.
The department is working in cooperation with other departments towards comprehensive improvement to the federal regulatory regime for mining. We've been very grateful for the work that's been done by this committee on that subject.
Areas under review, as you know, include environmental assessments, administration of the Fisheries Act, redefinition of waste, and land use.
The government is also examining the impacts on competitiveness of the new Canadian Environmental Assessment Act. In this regard, in October Natural Resources Canada and the Mining Association of Canada co-sponsored a seminar to examine the streamlining of regulations. From this and from other meetings with regulatory departments came an action plan that commits both parties to establishing more structured mechanisms to address such concerns as fish habitat, environmental assessment and land use.
While proceeding with our four strategic directions, we're also pursuing our goal of streamlining administration in the department by increasing automation, saving on costs and eliminating duplication.
We're fulfilling our role in reducing the size of the federal government. Our human resource plan will reduce our staff by more than 25%. We have recently been engaged in the second phase of program review, and we have identified further reductions in the department's budget of more than $14 million in fiscal year 1998-99. Both programs and staff levels will be affected. Present estimates suggest a reduction of between 75 and 100 positions in 1998-99.
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On the people side of the program review exercise, we were involved this past year in two successful ventures to help affected employees identify opportunities outside the public service: entrepreneurship day and the job fair. We will continue to assist affected employees through special activities such as these, and we are also directing new efforts to the employees who remain in the department. Some are in need of increased rejuvenation with respect to their work packages, which in some cases have changed radically.
[Translation]
Ladies and gentlemen, this is a brief presentation of some of the highlights of the department's mandate, strategic directions, activities and performance. Our 1996-1997 estimates document provides a detailed comprehensive picture.
In fact, this year's expenditure plan for the department - Part III of the Main Estimates - was prepared as part of a pilot project to improve the information that government provides to Parliament.
We hope that these improvements will be most useful in your deliberations and we welcome your feedback.
[English]
We hope, ladies and gentlemen, that the improvements we've made in drafting our estimates will be useful to your deliberations, and we would appreciate your feedback.
Thank you. Merci
The Chairman: Thank you very much.
We'll begin the questioning with Mr. Canuel.
[Translation]
Mr. Canuel (Matapédia - Matane): I have three questions.
In the first paragraph on page 2 of your brief, it is stated that between 1995-1996 and 1998-1999, Natural Resources Canada's budget allocation will be cut in half, from $841 million to $421 million, which is a 50% reduction.
Two things come to mind when I read that. Either the department had too much money and didn't know what to do with it, or it is suffering brutal cuts, which are extremely painful. I would choose the second scenario, namely, that the department is undergoing massive cuts.
Don't tell me in your answer that the services will remain much the same and that there will be as much money available for research and development, at a time when research and development is being cut back at Varennes and elsewhere, and jobs are being cut in the Tokamak project.
There's something strange about all that. I think it's almost laughable, not to say meaningless, to have a Department of Natural Resources with a budget of only $421 million.
When I ask questions on this I'm often told the same thing: ``Don't worry, there will be virtually no reduction in services. We will be able to carry out much the same research projects." Why is it that in order to do the same research, you had $841 million, whereas now you have only $421 million, which is a 50% reduction?
I'm going to be a little more blunt. Should the department not disappear completely - that's probably what's coming - and be incorporated into other departments?
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It is all very well for our committee to make valid suggestions, but we realize that in the end the response is almost a categorical no. Money is the lifeblood of any activity. Without money, there is no point in making wonderful recommendations, they will not be implemented. I would like to hear your comments and answers to these points.
[English]
Ms McCloskey: Thank you, Mr. Canuel. You have quoted the numbers quite accurately, and it is a substantial decrease in the financial resources available to the department. Three of the areas that account for a large portion of the decrease are the termination of participation in energy megaprojects, the forestry regional development agreements, and the mineral development agreements. These three areas account for a significant portion of the decreased resources that the department will have to incorporate into its activities.
With respect to other areas of the department's activity with this kind of a change in the resource envelope available to us, we have undertaken to do such things as to reduce our forestry presence across Canada from seventeen establishments to six. Each of the six remaining establishments will have a national network with particular scientific activities ascribed to them for a leadership role, and we anticipate that by using enhanced technology and by focusing on a smaller number of activities we'll be able to deliver a quality product. But there's no question that there are activities that will be gotten out of altogether. There will be significant reorganization, and I don't think there will be any area of the department that won't have some reduction in the resources available.
[Translation]
Mr. Canuel: I also mentioned the Tokamak project in Varennes, but you did not answer that part of the question. Please tell me if I am mistaken, but it seems to me that Quebec is suffering heavy cuts in the area of research and development. This is not a partisan comment, but I don't think Quebec is getting its fair share in this area.
In the Speech from the Throne, the government said that the forestry and mining sectors were to be turned over to the provinces. I have nothing against that. But will there be any compensation if you give the provinces full responsibility for these matters? In forestry, for example, the budget for private woodlots was shared 50/50. Would you also be turning the money over to the provinces?
[English]
Ms McCloskey: Thank you, Mr. Canuel. On the subject of research and development in the province of Quebec, we've been very mindful as we've gone through the process of program review to take into account both the needs and the strengths of different regions of the country. With respect to the science and technology in our department, a quarter of it outside the national capital region will continue to be done in the province of Quebec, where we have laboratories that look at issues in mining and energy, and where we have a presence for the Geological Survey of Canada. We also have a main forestry research centre in the city of Quebec.
With respect to the Speech from the Throne, there was a statement in the Speech from the Throne that said the federal government would consider withdrawing from certain functions in areas such as forestry and mining that might more appropriately be done by others, including private organizations and the provinces.
In speeches she's given since the Speech from the Throne, the minister has indicated that the government and the department have gotten that process well under way through program review and through restructuring. We will confine our activities to areas of federal responsibility in the international field in science and technology where national issues are concerned and where economies of scale are required in environmental areas, national statistics and aboriginal peoples and federal lands.
The Chairman: Mr. Canuel, a third question.
.1140
[Translation]
Mr. Canuel: You didn't tell me whether you would turn over to the provinces the budget that was available for private woodlots. Will these funds be given to the provinces?
[English]
Ms McCloskey: Thank you, Mr. Canuel.
The forest development agreements have been terminated and at this time there are no indications that the government plans to reinstate them. With respect to the private woodlot owners, the minister has indicated that she's prepared to work with her colleagues and departments such as Human Resource Development to see what assistance might be provided.
The Chairman: Thank you.
[Translation]
Mr. Canuel: That aspect is not very encouraging. We don't know much more about it. Could you tell the committee what is happening with the efforts to achieve an international agreement on forestry management certification?
[English]
Ms McCloskey: With your permission, Mr. Chairman, I'd like to turn the microphone over to Dr. Hardy of the Canadian Forest Service.
[Translation]
Mr. Yvan Hardy (Assistant Deputy Minister, Canadian Forest Service, Department of Natural Resources): Mr. Canuel, certification is an initiative undertaken by the forestry industry, and not by one or more governments. A contract was awarded to the Canadian Standards Association to carry out this project. It is taking steps to obtain certification on behalf of an alliance of industry representatives.
Certification will be based on forestry practices and legislation in effect in each of the provinces. In order to grant certification, the association needs the name of companies which contribute to sustainable development in a province where the laws and regulations on forestry are enforced. Some of the companies may not comply absolutely with the laws and regulations, but they must meet the minimum criteria for sustainable forest development or sustainable forest management.
For obvious reasons, the process has been quite slow at the beginning. There are a number of participants in an undertaking of this type. There are those who represent only industry, but there are also those with more interest in ecological principles. These people had to reach a consensus.
Our role is to provide follow-up. We are also playing a key role by giving the provinces a forum, a place where they can discuss these issues. The provincial representatives meet with us every three or six months to exchange information, tell us about their concerns, and so on.
The process is proceeding relatively well and we expect to see some results in the next six months.
[English]
The Chairman: I'll let a couple of Liberals ask questions and then come back to you.
Mr. Wood.
Mr. Wood (Nipissing): Thank you, Mr. Chairman.
Madam Deputy Minister, you touched on this quickly a few minutes ago. Coming from Ontario, I am concerned about what is happening with the recently announced deep cuts to the provincial Ministry of Natural Resources. In our efforts to end overlap and duplication, we're letting the provinces have sole jurisdiction in these two areas. Are you concerned that downsizing at the provincial level will leave little or no resources to monitor and assist the forestry and mining industries in Ontario and elsewhere?
Ms McCloskey: Thank you for the question.
We've been watching with great interest what is happening in the provincial governments. We looked at the numbers for the province of Ontario, and a good portion of the number with respect to people had to do with their provincial park system. I believe the government in Toronto has decided to move closer to commercial management of provincial parks.
.1145
The other indication we have had is that they're going to look for more voluntary compliance in the forestry area, with good practices on the part of the industry. We assume they will set up some kind of monitoring process here, but we regularly meet with all of the provinces on the subject of forestry, at the assistant deputy minister, deputy minister and ministerial levels.
We meet at the senior levels a minimum of three times a year, and we go through in fair detail the areas where the different jurisdictions feel there may be gaps or problems. Our next meeting will probably be in June of this year, and I think we'll have a fairly good discussion with Ontario. I believe Saskatchewan has just announced some cuts, so I expect there'll be an exchange of views there. We'll see if there aren't things we can do to work more cooperatively together because both levels of government are feeling financial pressures.
Mr. Wood: So is it safe to say that you are concerned about it? Or does it bother you that much?
Ms McCloskey: We're concerned about stewardship, and in the process of governments dealing with their deficits and budgetary pressures, we're trying to work cooperatively together. It is not that we didn't in the past...but more intensively now, so that it's clear both to the people who make immediate use of the forests, whether for fibre, for recreation or for other purposes, as well as to those who have a more social-ecological interest in the forests, that the levels of government are working together to ensure that Canadians have a resource at their disposal for the future.
There's no level of government that isn't coming to grips with the need to behave in a different way than we have in the past. So our concern would be of the nature of trying to make sure there aren't any significant gaps.
Mr. Wood: Madam Deputy Minister, I'd like to ask Mr. Cleland a question.
Ms McCloskey: Yes, indeed.
Mr. Wood: As we're withdrawing our involvement in forestry and mining, it would seem the energy sector of the Department of Natural Resources is becoming of greater importance. I think we all understand the rationale behind the devolution of responsibilities to the provinces, which is to reduce overlap and duplication.
Mr. Cleland, what is the future of the energy division of Natural Resources Canada? Could a similar devolution be feasible? My question is not one of policy but of capability. Are the provinces in any position to take over these responsibilities, in your mind?
Ms McCloskey: Mr. Chairman, I think I would like to start to respond to that question. I do not want to put Mr. Cleland, who's the acting assistant deputy minister, too clearly on the mat.
Mr. Wood: I thought he was in charge of energy.
Ms McCloskey: He is, but that's a pretty big question.
We've known for a long time that energy is a strategic resource in a very particular way. Much of the economy and daily life operates on the basis that energy is available, whether for power, for fuel or as an input to all of the other things we use in our daily lives. So there has not been a debate with respect to jurisdiction of the same magnitude there has been with forestry and mining, where the provinces basically own the resource in the ground.
We are making changes in the energy sector. A lot of them have to do with getting out of the megaprojects, which was a commitment of the government, and doing less in the area of traditional fossil fuels such as oil, gas and coal. We're focusing on new energy sources and energy efficiency. We have interesting responsibilities in the area of regulating, either directly or through offshore boards of the National Energy Board and the Atomic Energy Control Board.
There isn't an area where I expect we'll be unable to meet our responsibilities with respect to energy. The provinces have quite a different set of responsibilities here. For example, they are concerned with regulating the public utilities, which is a very important function, of course. Generally speaking, the relationship works very well.
Would you like to add a supplementary to that?
.1150
Mr. Mike Cleland (Assistant Deputy Minister, Energy Sector, Department of Natural Resources): Maybe I will just a bit, to expand on a couple of the points the deputy mentioned.
There are at least two areas in which we have, outside the department in fact, significant regulatory responsibilities. On the one hand, there is the interprovincial and international transmission of energy, which is carried out through the National Energy Board, and there is of course the whole area of nuclear power. Those are two very broad, big areas that I think are distinctive to energy, not like most other sectors of the economy - not just the natural resource sector.
Within the department, as Ms McCloskey has said, the focus really has become very much on sustainable development, environmental management, energy efficiency, and renewable energy. It's a very different portfolio from in the past. That is the priority and the direction for the energy sector in the coming years.
Mr. Wood: Thank you, Mr. Chairman.
The Chairman: Mr. Reed.
Mr. Reed (Halton - Peel): Thank you very much.
I see in your statement, Deputy, a very encouraging thread that seems to permeate the statement in terms of a thrust towards more environmental awareness than we've seen in the past. I see the term ``energy efficiency''. I see greenhouse gases being acknowledged, and I expect that you were responsible for the inclusion of the expansion of flow-through shares on renewable energy projects, which those of us who are actively engaged in renewable energy find very encouraging.
I'm particularly interested in one paragraph here. This is something I don't know anything about - the climate change voluntary challenge and registry program, that it ``encourages Canadian organizations''. I was wondering whether you could explain that program and whether Canadian organizations also include private companies and so on.
Ms McCloskey: Yes. It's a very important priority for the minister. In this case, I will askMr. Cleland whether he would speak about this issue.
Mr. Cleland: Let me just take it back about a year and a half when the federal and provincial energy environment ministers met - I guess it's not quite a year and a half - and approved Canada's national action program on climate change. I guess it was last February. They agreed that the priority initiative at that time would be the voluntary challenge and registry and asked the Hon. Anne McLellan to champion the initiative and take the lead in developing it, which she did.
The program in its essence does very much focus on private entities. The term ``organizations'' is used because it also encompasses governments, including municipal governments, schools, hospitals, and other institutional bodies. Essentially what the program tries to do is capture as many as possible of the big emitters of greenhouse gases. Those tend to be big companies. They also tend to be big institutions and governments, whether direct emitters or indirect emitters by virtue of being big users of electricity.
It has been one of the priorities for the minister and the department over the past year, and it continues to be, as the minister reported to her colleagues - again, her federal and provincial energy and environment colleagues - last November. At that time we had got engagement from over500 organizations representing more than half of the greenhouse gas emissions in Canada. We're continuing to add to that list, and we're continuing to deepen the quality of the commitments we're getting from them.
Mr. Reed: Could I expand on this briefly? I don't want to belabour this one subject, as I have some other questions, but could it involve companies whose product or whose processes involved the replacement of greenhouse gas emissions by other companies?
Mr. Cleland: The short answer is yes.
One of the aspects of the program that we've been encouraging is what we call partnership sorts of arrangements, not in the large ``p'', formal sense, but in which we might encourage companies to work with others that produce energy-using equipment, let's say, that may be more efficient, and the two of them in a partnership will collaborate to come up with better ways of reducing greenhouse gas emissions or to make their energy purchases from renewable sources. That's another example. So yes, it's a really important part of the program.
.1155
Mr. Reed: Thanks. I am going to try to learn more about it.
Would I be safe in assuming, then, that the ministry has made a decision to support the elimination of MMT in gasoline?
Ms McCloskey: The government took a decision to introduce legislation into the House with respect to MMT. Quite recently Mr. Marchi decided to bring that legislation back into the House.
There will be, I think, full discussion and debate on the subject, but as you probably know, there are a couple of schools of thought on MMT. The auto manufacturers feel it has a deleterious effect on some of the equipment on-board vehicles, and they are concerned about honouring warranties. Canadian refiners have indicated that it would be an enormous capital cost for them to get out of the use of MMT. So there are two important elements in the economy that have different views on this subject, and we're waiting to see how the debate goes.
Mr. Reed: Interestingly enough, since the Supreme Court in the United States ruled that the EPA had exceeded its mandate in outlawing MMT in the United States, the refiners there have elected not to reintroduce MMT, or not even to enter into the environmental approval process to bring MMT back into the stream.
I wonder whether these hundreds of millions of dollars...I wonder about the legitimacy of them and whether we are facing a similar argument base to what we faced when we were pushing to get the ethanol from biomass program into place in Canada. The argument was put up that Canada would lose 2,000 jobs in the refining industry and so on, while the other side of the argument was not made until it was pried out that it would actually create 6,000 jobs in other ventures.
Surely the environmental impact of the replacement of MMT with oxygenates, particularly as octane enhancers, would lead one to believe that this new ministry thrust towards greater environmental awareness would tend to consider this issue in some great detail.
Ms McCloskey: My understanding with respect to the United States is that some refineries have indicated that they will, in light of that court finding you mentioned, use MMT and some will not, as you've also said.
The market there is quite different from the one here. It's a very large market. You can have refiners that are profitable having different mixes in their fuels. Here the market is relatively small, and the information we get is that refiners will either have it or they won't have it. There isn't a lot of scope for a mixed market in terms of fuels.
We hear all sides, we do our analysis and we are waiting to see what happens with the legislation in the House.
Mr. Reed: It is interesting -
The Chairman: Julian, we're out of time. I'm going to go to Mr. Thalheimer.
Mr. Thalheimer (Timmins - Chapleau): I am particularly concerned about minerals and metals. Your objective, as stated on page 44, is ``To encourage the sustainable development of Canada's minerals and metals industries....'' When I look at the estimates on page 45, in 1994-95 we had $78,613,000, and now in 1996-97 we're down to $55,667,000. We're going to drop down to $43,359,000. There's not much money available for mineral development for sustainability of our mines, is there? Is that an adequate amount? Is it meaningful in any way, that small figure?
.1200
Ms McCloskey: We take the resources we have and try to use them as reasonably as we can, and then try to account for the use of those resources.
When we talk about sustainable development in metals and minerals, what we're looking at is life cycle issues with respect to these natural resource products. We do work in the area of exploration through the Geological Survey of Canada. We do work with respect to the prospectors and developers, sometimes on the fiscal side, sometimes in terms of providing them with information.
When it comes to mine development, our interests there include those associated with environmental assessments. Through the process we're concerned with issues that have to do with health and safety, and so we have R and D that address various aspects of what goes on in mines. We're also concerned with clean-up associated with the waste products from mines.
On the marketing side, generally markets for metals and minerals are set internationally, so we're not involved in that in any particular way. We do, however, internationally address in this area the whole question of encouraging inward investment and also the whole question of what might be termed market access issues around the trade in minerals and metals, where we try to ensure that any international decisions taken are based on sound science and reasonable practice.
We also have in place in Canada a multi-stakeholder process, such as the Whitehorse Mining Initiative, that has agreed to take on the position that we want to have a thrust towards sustainable development in this sector. And the federal government is now consulting on a policy with respect to minerals and metals, and the overarching theme of that policy is sustainable development.
I wouldn't be believable if I said we have all the money we'd like to have, but I think we have sufficient money to do the task as it's been newly defined.
Mr. Thalheimer: Let me give a specific example to you. For example, what part did the department play in the Voisey Bay discovery? What part did your department play in that discovery, and now that it is discovered, what role are you playing now to get the thing developed and get it airborne?
Ms McCloskey: Mr. Ron Sully, who is our assistant deputy minister in this area, is federal co-chair of a working group on Voisey Bay, so with your agreement I'd like to ask Mr. Sully to speak to this question.
Mr. Ron Sully (Assistant Deputy Minister, Mining and Metals Sector, Department of Natural Resources): I don't believe the department can take direct credit, if you like, for the discovery itself of the ore body, although I would want to check on this. There may have been some preliminary geoscience work done in earlier years either on behalf of the provincial government or the federal government or both. I think I would want to get back to you on that.
With respect to current activities, I think the role we are trying to play is to ensure that this project can be developed in a timely fashion and respecting all the social and environmental considerations that are at play. I think our minister likes to talk about it as a possible model for how we can develop mines in Canada.
As you know, it's not only a very large project but it does face certain complications, not the least of which is that there are overlapping land claims from two different aboriginal groups associated with the project that have to be dealt with, and the whole question of the way we conduct the environmental assessment process.
What we're trying to do is work with the other key agencies involved, like the Canadian Environmental Assessment Agency, Environment Canada, Fisheries and Oceans, and the Department of Indian Affairs and Northern Development, to make sure we do all we can as a federal team to ensure that the project proceeds smoothly.
The Chairman: Thank you, Peter. We'll go back to Mr. Canuel for a couple of follow-up questions.
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[Translation]
Mr. Canuel: Earlier, you said that Quebec got 25% of the research and development funding. If possible, I would like you to provide me with those figures.
Has the decision been made with respect to the Tokamak project? Are the cuts that have been announced official? Could this decision be changed?
As you are well aware, this institution is working perfectly. It has proven its worth, and personally, I thought it had a promising future. At the moment, the people involved are not only concerned, they're also demoralized. Is there any way of reversing this decision?
[English]
Ms McCloskey: Thank you, Mr. Canuel.
In the course of a program review, the decision was taken by ministers that we would address the Atomic Energy of Canada corporation in the second year. There was an analysis undertaken with respect to the activities of AECL. As a result of that, there has been a decision taken by ministers that the budget for AECL will be reduced from $174 million a year to $100 million a year. That is with respect to federal appropriations only. The bulk of AECL's funds come from commercial activity.
The funds I have just spoken of are essentially involved in various aspects of research and development and ensuring the viability of the CANDU, which of course is a nuclear power generation unit.
Moving federal appropriations from $174 million to $100 million meant a significant change in what AECL did, and they came to the government with a proposal that included a decision not to proceed with support for fusion research. It's in that context that funds that have been provided to the Tokamak at Varennes will not be available after a transition year. I believe the decision taken by ministers will remain.
We have very severe budgetary constraints in order to meet the deficit reduction targets that the Minister of Finance sets out every year when he delivers the budget in the House in February or March.
We are conscious of the fact that the fusion research that has gone on there, which went on in both Quebec and Ontario and was a partnership with the utilities, has been good science. There's been no question that the science has been first class. The issue for the federal government is one of energy priorities and energy research priorities. The decision was taken that fusion, with an extremely long future time horizon, may be out as much as 50 years and would not be funded at this time.
The utilities have significant funds at their disposal - I would expect greater funds than the department does, and it may be that they'll be looking at this whole question of a future fusion research.
[Translation]
Mr. Canuel: I've only one comment to make, and it was the focus of my first remarks. In my view, the Department of Natural Resources is unfortunately about to disappear. However, this could have been a very important department. By cutting off its lifeline, we are condemning it to be ineffective.
[English]
The Chairman: Thank you for that comment, Mr. Canuel. Mr. Serré is next.
[Translation]
Mr. Serré (Timiskaming - French River): We all know that in the Speech from the Throne, the government stated its intention to devolve certain powers to the provinces.
While these may be fine principles, they are of some concern to me and to some of my colleagues. We are wondering what this all means.
My question is particularly for Mr. Hardy and Mr. Sully, because I am most interested in the areas for which they are responsible.
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Could you give us some concrete examples of what this transfer of powers to the provinces means for the forestry and mining sectors? From which areas is the federal government withdrawing, and what does it mean for the department?
[English]
Ms McCloskey: Mr. Serré, if you agree, I will begin to answer that question and then turn to my colleagues.
If you take the forestry sector, one of the areas we are withdrawing from in favour of the province is regional development. For that reason, the forest development agreements and the mineral development agreements either are terminated now or will be terminated at the end of the contract period. So regional development is, I think, a prime example of where we are withdrawing.
I would ask Mr. Hardy if he would like to add to that.
[Translation]
Mr. Hardy: Essentially, Mr. Serré, that is exactly what happened. The withdrawal was almost complete at the time of the Speech for the Throne. For the current fiscal year, there are still two provinces, British Columbia and Quebec, in which we are technically in what is called the pay-out year. That means that the funds for approved expenditures will be spent during the year.
When the announcement was made, the withdrawal had already happened, or almost, and the activities you see in Part III of the Estimates are those in which the Canadian Forest Service will be involved this year and probably in years to come. These include research and development activities, national and international coordination, and so on.
Mr. Serré: If I understand correctly, this devolution of power simply means that money will no longer be spent on regional development. There has not really been any transfer of power or responsibilities. All it means is that there will no longer be any grants for regional development.
[English]
Ms McCloskey: It's fair to say that when you're talking about the hands-on management of the resource in the forestry sector and in the mining sector, it is the responsibility of the province and it will remain the responsibility of the province.
One area in which we were active, which is a point of discussion with the provinces about who's responsible, is regional development. The decision was taken to withdraw from that area.
We also, I should say, in our regular consultations with the provinces - and Dr. Hardy is, in part of his regular cycle of activities, meeting with each province individually at this time - are talking to them about whether or not there are other areas in which we could have more rationalization than we have had up to this point. Perhaps he'd like to make a comment on that.
[Translation]
Mr. Hardy: We already have an agreement framework with the provinces according to the respective jurisdictions, in particular... It is clear that the provinces have power with respect to the development of their resources, and don't want us involved in this area. However, most of the provinces are very weak in the area of research. That is why we have an agreement framework with them.
In the last few months, I have managed to meet with representatives from seven of the ten provinces. I will be meeting with representatives from the other three, Ontario, Manitoba and Saskatchewan, in the next two weeks. In every case, they have given us unconditional, clear support for our role in research and development, including national coordination, the development of national data and the formulation of national positions in international forums. I can tell you that we have very good working relations with the provinces.
Another factor comes into play here. I'm talking about the budget cuts that provincial governments have to make. This means that synergy between the two levels of government becomes even more important.
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In some ways, it is becoming easier to reach agreement with the provinces. However, at the same time, there is more pressure on us to deliver in certain areas.
Mr. Serré: I have another question, Mr. Chairman.
[English]
The Chairman: Make it very short, please.
[Translation]
Mr. Serré: I would like to change topics for a moment, and I know that my question does not really come under your department, but rather the Department of the Environment. We are providing less money for regional development, but we're not giving anything to industry in return.
I'm putting myself in the position of a mining company that wants to operate a mine. It will have to go through an environment process and get permits and licences from Fisheries and Oceans Canada and other departments. However, the various departments, such as Environment or Fisheries and Oceans, have no deadline by which they have the inform the company of their intention to intervene.
Does your department intend to coordinate things, to insist that guidelines be established and deadlines set regarding the withdrawal of the various departments from these areas? I fail to see why the Department of Fisheries and Oceans should have to grant a permit so that the company can cross a little 10-foot creek. This delays the start of mining activities by six months. Your department should be coordinating things so that forest and mining companies can operate in family fashion, as we say.
[English]
Mr. Sully: I think your question relates to some of the issues your committee studied last winter, and even earlier in the report you tabled entitled Lifting Canadian Mining Off the Rocks.
The government currently has under consideration the recommendations that came from your committee, and it is aware that this question of the applicability of federal triggers under the environmental assessment process - the Fisheries Act being a major trigger - is an important issue and is being considered.
We are working very closely on this issue with the Department of Fisheries and Oceans and the other regulatory departments involved. We understand what the problems are. There's a recognition that there has been some uncertainty in the system for project proponents, which likely stems from court decisions taken years ago whereby the federal government was found to have a regulatory responsibility with respect to certain environmental issues beyond what had been contemplated.
The implementation of the Canadian Environmental Assessment Act was designed to remove that uncertainty. We know it doesn't solve all the problems, but we are working very hard with the regulatory agencies on one hand, and with the mining community on the other, to provide that certainty.
The Chairman: Thank you. Mr. Bélair.
[Translation]
Mr. Bélair (Cochrane-Superieur): First of all, I don't intend to repeat what my colleagues have said. However, I would like to say that I fully support the comments made by my colleague from the Bloc Québécois in his first question, and those made by my colleague Mr. Wood, regarding the involvement of the provinces in forestry, in particular.
It is becoming increasingly clear that the future of the Department of Natural Resources is not very rosy, and that since the cuts announced last year, the department is moribond. The last budget put it into a coma. At this point, I wonder whether it might not be much easier to simply dismantle the department. All international matters will then be turned over to the Department of International Trade or to the Department of Foreign Affairs, and everything regarding research and development in forestry, mining and energy would be turned over to the Department of Industry.
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Would that not solve the problem? The federal government's presence in these areas has become bothersome; its role is almost non-existent. As I said before, in private conversations in my area, people really don't see the results of R and D.
I'm speaking out of self-interest when I talk about forestry and mining. Nothing concrete ever comes out of the department. Forestry companies and forestry workers are never told: ``Look what Natural Resources Canada is doing for you."
We have to justify government cuts, because we are on the front line. There isn't much left that we can say, and it would be much easier to simply state that the department no longer exists, that it has been dismantled.
At our first hearings five or six years ago, when I was a member of the opposition, forestry and mining came under nine different departments. I was one of those who advocated that the responsibility for everything related to forestry and mining should be given back to Natural Resources Canada so that we could have a really strong department. That is not what happened. Rather, the department is becoming weaker and weaker and we have to justify its existence.
I don't know whether you care to comment. The cuts the provinces are planning will definitely be felt. As my colleague said, the process is already under way. We will transfer responsibility to the companies, who are already having a hard time. As for the environmental regulations, they are still not in effect.
So there has been a complete breakdown starting at the top. I wonder why this has happened. Perhaps we should be asking you the question. Why did the federal government decide to stop funding provincial development agreements? That was the perfect instrument.
My colleague, Mr. Canuel, referred to the Eastern Plan, which, I should mention in passing, was very generous. Northern Ontario was not as lucky. You enjoyed the benefits of this type of plan for 50 years. When you add all that up, you have to wonder where the Department of Natural Resources is heading. I don't know whether you have any comments, but I do have a second question.
My second question concerns Canada's representation at the United Nations. Next year, the UN Commission on Sustainable Development will look at the issue of forestry. I have some very specific questions on this. What document will the department use to establish Canada's position. Who will take part in the conference?
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I'm afraid that some points of view, which I would describe not as extremist, but rather subjective, might be presented to the United Nations.
Is there already a strategy regarding Canada's position at this conference on sustainable development, or is one being developed at the moment?
[English]
Ms McCloskey: Mr. Chairman, I have to make something of a response to the first question.
Picking up on one of your points, I worked in the Department of Foreign Affairs and International Trade for over a decade. If the Department of Natural Resources didn't exist and its activities were scattered throughout the federal level and other places in the economy, I'm convinced we'd be reinvented after a certain period of time. When there are issues such as the softwood lumber issue with the United States, we have people working day and night on that.
The international trade negotiators deal with international trade issues around the world. The people in our department, when it comes to something like softwood lumber, understand the industry, the economics and the social issues. You need this combination of individuals and you'll never get that kind of in-depth knowledge in the Department of External Affairs and International Trade. That is simply because of their mandate; it is not a comment on the quality of the people.
With respect to turning all research and development over to industry, we have national problems that can only be addressed at the national level, where you have particular economies of scale. Much of the emphasis in our research is on health and safety and environmental issues, which are public policy issues, and the federal government has to take the lead.
When you talked about the federal presence across the country, you're right, the forest development agreements and the mineral development agreements provided a real presence. We didn't go willingly into this particular new phase of our existence, but we're there. We're trying to remain in touch with broader segments of the Canadian population, because we don't deliver services to citizens - there are departments that do, but that's not our business. We're having a national mining week and national forestry week in May, and we have an aggressive publication campaign under way. You will see newspaper supplements and posters and other things, which we will be making available to committee members as well as to other members of Parliament, to try to raise the awareness of Canadians to the importance of these sectors.
Mr. Bélair: But those are only exercises in public relations. I'm talking about something concrete that has come out of research and development that affects pulp and paper, sawmills or mines - new technology. The results of your research are never published, although maybe we hear about it because we work here.
The Chairman: Maybe you could just let the deputy minister finish.
Ms McCloskey: To clarify, the things I talked about are not just public relations. It's information and education as well as public relations. We try to make it palatable so that the greatest number of people will actually pay attention.
On the subject of our R and D results, I'll ask Dr. Hardy to respond. He can also respond to your second question, Mr. Bélair.
[Translation]
Mr. Hardy: First, we should point out that the department's mandate as regards the Canadian Forestry Service covers forestry resources, not processing. This means you won't be seeing our research applied in a pulp and paper mill, for example. But if we do a study...
Mr. Bélair: But you do fund the National Forestry Institute which conducts a great deal of research.
Mr. Hardy: No, we do not. We fund Forintek and in return receive codes and standards that serve as promotional tools and are very useful in penetrating the industry.
For example, Japan has just accepted Canadian standards for two-by-fours. This is a direct result of Forintek's efforts.
Mr. Bélair: That's what I have been saying.
Mr. Hardy: So it is happening. We have just gained a foothold in a new market.
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The best concrete example of a broad forestry management strategy is Bacillus thuringiensis, currently the only pesticide certified in Canada for use against defoliating pests. The Bacillus is a direct product of the Canadian Forestry Service.
Mr. Bélair: That's what we want to know.
Mr. Hardy: With the new fire prevention system, which makes it possible to determine hazard levels, the Canadian Forestry Service can predict the location of the next fire with 90% accuracy.
The genetic make-up of all trees planted in northern Ontario and elsewhere... I have to be a little more modest here; the Canadian Forestry Service is responsible for only 50% of that. I can give you many other examples like this.
Mr. Bélair: I would like to have a list of those examples.
Mr. Hardy: We will ensure that you get one.
Mr. Bélair: I'd like to be able to tell my constituents: ``Here is what the government of Canada is doing for our forests."
[English]
The Chairman: Maybe if you want to get into more detail, you can have the conversation directly with them, but we've been going on now for 15 minutes on that.
Mr. Bélair: My second question, concerning the United Nations, was not answered.
The Chairman: Can we have a quick answer on the United Nations issue?
[Translation]
Mr. Hardy: The Intergovernmental Panel on Forestry, a United Nations body, is currently attempting to investigate the status of forests throughout the world.
And we, in concert with the Department of Foreign Affairs, have been given a mandate to represent Canada. We have set up a system whereby we can consult with provinces, the forest industry, and NGOs. When we participate in one of the major fora, such as the one in Geneva, the Canadian position will be based on intensive consultations.
As you said so well yourself, none of this is easy. We usually start off with clear right and left positions. Generally, depending on the procedures being applied, all the individual groups come together in a plenary session, where each group presents its position. At the end of the day or at the end of the session, the Canadian position takes its final form.
Mr. Bélair: Isn't there any participation by parliamentarians?
Mr. Hardy: I imagine that could be considered.
Mr. Bélair: So we do count for something, then.
[English]
The Chairman: Thank you very much.
I'm going to wrap up, but before I do so I have a couple of very quick questions to ask you.
The first one has to do with the revenue side of your budget. From my understanding - and correct me if I'm wrong - there's only one part of your revenue collection that stays with the department, and that has to do with your geomatics revolving fund. The rest of it all has to go into consolidated revenue. So the one part of revenue that you can keep to invest back into the department for programming, etc., is that particular fund. I notice from looking at the estimates that there is a 150% drop in revenue in that particular area. I'd like you to comment on that, because I'm curious as to why you're getting that kind of drop in the one part of revenue that you can hold onto yourself.
The second issue is that I understand you have withdrawn support, or are going to withdraw support, to the Sudbury Neutrino Observatory, and I'm interested as to why that decision was taken.
If you can answer both of those, I'd appreciate it.
Ms McCloskey: Mr. Chairman, I'll start with your second question, and then I'll askMr. Bickerton to answer your first question.
With respect to the Sudbury Neutrino Observatory, that construction will actually be completed. AECL will stay as part of the project, and AECL has agreed to provide technical support into the future. Other financing possibilities have come forward, so the observatory is not under any threat of not going forward and operating.
The Chairman: So the commitment is still there.
Ms McCloskey: No. Our financial commitment has changed, but other partners have been brought in. AECL will stay there for the finishing of the construction period and will be available to provide ongoing technical support, because it has the scientists and technicians who can do that. So it seems to be well in hand.
Mr. Bélair: The industry has been... [Inaudible - Editor]
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Ms McCloskey: It's actually a very good success story of a partnership arrangement.
The Chairman: On the money...?
Ms McCloskey: Yes. Mr. Bickerton.
Mr. David F. Bickerton (Acting Assistant Deputy Minister, Corporate Services Sector, Department of Natural Resources): I am looking at the page in part III and I am not sure what reference you're talking about. My information indicates that the revenue is staying more or less the same over the current year.
The Chairman: I am looking at page 80 of part III, ``Provision of Departmental Services to the Geomatics Canada Revolving Fund'' - 1995-96 estimates were $2.5 million, 1996-97 estimates are $1.0 million. To me that's a fairly substantial decrease, unless I am missing something.
Mr. Bickerton: There is an element of that. That's the money the department charges the revolving fund for its administrative services. There are some changes in what we are charging to the revolving fund, but it doesn't represent a major change in the operation of the revolving fund itself.
The Chairman: Rather than have the discussion go back and forth, maybe you can explain this to me separately from this meeting. To me it's $2.5 million going to $1 million; that seems clear. If there's an explanation, we can do it afterwards.
As everyone knows, Mr. Bélair and Mr. Canuel have raised some political matters that are difficult to answer at the deputy minister and ADM levels. We are fortunate that we won't have to wait long to get some clarification. The minister will be here on May 1, and that question about the whole future of the ministry is one I am sure the minister will want to address.
Thank you very much. I appreciate your time.
We stand adjourned.