[Recorded by Electronic Apparatus]

Tuesday, October 29, 1996

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[English]

The Chairman: We are pleased to be meeting today in Fort McMurray. Pursuant to Standing Order 108(2), the natural resources committee of the House of Commons is conducting a study on natural resources and rural development.

As most of you know, we began this study last spring, when we had an opportunity to have witnesses in Ottawa. We felt it was important as part of process that we have an opportunity to travel into rural Canada to talk directly to people who are dealing with this issue on a daily basis and who can provide their input to us.

We are generally looking for ideas on how you believe the federal government can pursue particular policies or directions with respect to facilitating rural development.

As I said, we're pleased to be here today in Fort McMurray and to have Mr. Philip Lechambre from Syncrude as our first witness.

Mr. Lechambre, would you like to proceed with your opening statement? And then I'm sure the members of the committee would like to ask you some questions.

Mr. Philip Lechambre (Chief Financial Officer, Vice-President, Business and Corporate Affairs, Syncrude): Thank you, Mr. Chairman. I would like to welcome you to Fort McMurray and to our winter. I hope the experience of coming into the airport in the snowstorm last night wasn't too terrifying.

I understand that later today you'll be touring the Syncrude plant, so I won't go into a lot of detail about our operations this morning. You'll have a great first-hand opportunity to see for yourselves. I also understand that the mayor of Wood Buffalo municipality will be making some comments about how stakeholders in this region are working together.

In particular, I am going to provide some comments on how we think the oil sands industry in this region is perhaps a model for rural development done on a cooperative basis for the benefit of all stakeholders. Then I'll provide a couple of comments and recommendations for your consideration.

Just to give you a general sense of our company's operations - and this material is in the package that was handed out to you - the economic impact we have on this region is pretty significant, let alone on other parts of Canada.

We produce about 75 million barrels of crude oil, 12% of Canada's supply. Right now we spend about $1.2 billion annually on our capital and operating budgets and $275 million of that is our local payroll, of which $100 million goes to payroll taxes. Our provincial royalties have averaged $150 million per year over each of the last five years, though in recent years they've been higher. Federal and provincial income taxes at the corporate level have averaged about $100 million. That gives you a bit of a sense of the revenue spin-off for government.

This year we have just kicked off the first $500 million of our $2 billion Syncrude 21 program, which is an expansion of our plant production in this region.

With all the media coverage, I'm sure you are aware that close to $6 billion in oil sands projects have now been announced and are either under construction or under engineering development. I've included a summary of those projects in your packages.

In terms of local development, we're certainly committed to a strong local economy. In fact, the head office of Syncrude Canada is in Fort McMurray.

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We're also committed to the development of local and aboriginal businesses, and we encourage all our contractors and suppliers to do the same. And just to give you an idea, 31% of our 1995 operating budget - or $188 million - went to local companies. There are about 300 of them that we do business with. Of those 300, there are between 20 and 30 aboriginal businesses with which we have contracts at any one time.

The chart on page 4 is fairly busy and has a lot of detail, but I think it's worth spending a few minutes on. It really gives you a better sense of overall economic impact.

We employ about 3,600 employees directly. All of them are in Fort McMurray, except for about 90 who reside at our research centre in the city of Edmonton. The average annual salary of our employees is over $60,000 a year, and that's because we're a high-tech, high-skill operation. Because our employees are required to do more than one job, they are multi-skilled and multi-trained. A high expectation of ours is for continuous learning and education on the job, and given the market demand and the skill levels that are used, they enjoy pretty high salaries - and this also makes a contribution to the local economy.

Our equivalent workforce, which includes our contractors, totals about 4,600. We have another thousand on our site doing contracted work at any one time. So when you look at the direct and indirect spin-offs of that, we generate about 13,600 jobs across the country directly and indirectly every year. If you look at our operation from start-up to today, there have been about 270,000 person years of employment.

Of our payroll, we spend 5% to 7% every year on education and training because of the importance of training and on the job development. Our technology itself is changing, which is changing jobs and changing our plant configurations. That's also a very important part of our focus in the company.

Moving on to page 5, we have over 600 employees who are women, That's about 16% of our workforce, and 400 of those are in non-traditional careers. You will see on your tour this afternoon that about one-quarter of our heavy equipment operators are women, so the heavy equipment haulers, the plant operations and maintenance personnel make up a significant component of the women in our workforce.

Likewise with our aboriginal employees, between ourselves and our contractors we employ over 600 aboriginal people. That makes us the largest private sector employer of aboriginals in Canada, and that figure amounts to about 13% of our workforce. Last year we spent $55 million on either contracts with native companies and/or employment and payroll costs of native employees, so that's a significant contributor to the economies of native communities in this region. In this Wood Buffalo region, we work with eleven different aboriginal groups - five treaty Indian and six Métis groups - so a significant portion of our work with the native groups is in community development and in working to get employment up and good businesses established in each of their communities so that it will help towards their self-sufficiency over the long term.

Moving on to educational partnerships in this region, we have worked to develop a number of them over the years. The most recent and significant one is called Careers - The Next Generations. It's a program that has been worked through the Alberta Chamber of Resources. What we're trying to do there is create positions and more interest in trades and technologies in this province, especially given that there are a lot of new projects and resource development under way in Canada, particularly in Alberta. We're going to be facing a shortage of tradespeople here in the near future, so we think it's important to encourage education in that area, especially given the concerns of youth and the potential for high unemployment if something more isn't done in the educational field.

We have what is sort of a three-phase program. It starts back at grade 7 with job shadowing and with partnerships that we have here with the local high schools. The aim is to get students interested in trades, technologies and sciences. It then moves into the high schools under the registered apprenticeship program that we've worked out in cooperation with Alberta Education. This gets students from grades 10 to 12 interested in the trades, and it actually gives them work experience on our sites so that they have the equivalent of their first year of trade apprenticeship by the time they've finished high school.

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We then follow that up at the Keyano College level with the trade cooperative apprenticeship program, which is again very different and unique. It's recently developed, and what it does is give high school students employment with local companies after graduation without having to indenture them in a trade or guaranteeing them a job at the end of it. They're able to work for the next three years, and then at the end of the day they have their trade certificate coming right out of high school.

So those are three important components of encouraging trades development.

We also have a number of other partnerships with Keyano College. Keyano College Industry Education Centre was opened in recent years and houses our Syncrude corporate training centre. It also has the college's business education department, and Athabasca University and a computer training centre are established there as well. It has been a cooperative regional-industry-educational institution program done in just the last couple of years, and it has been working very well for us.

Moving on to page 7, as part of the centre, we set up a communications centre in cooperation with Keyano and Telus Corporation. We pooled our resources and our expertise, and we provide access to this locally, not just to industry or the college but to any group in the community or region that wants to have videoconference meetings. It has helped to reduce costs for organizations and has made for more efficient meetings.

In the environmental area, another very important part of our contribution to the community is continuously improving our environmental performance. It's very visible and it's an important objective of ours and of others in the region. For example, we've declared our support for the climate change voluntary challenge that is working towards stabilizing greenhouse gas emissions at 1990 levels by the year 2000. We're one of the very early signatories to the program, and we have filed our second action plan. It has in it a commitment to reduce our CO2 emissions by 23% per unit of production by the year 2001. We're investing over $1 billion over the next seven years in next-generation technology that is 50% more energy efficient than the current operations that you'll see today in that plant. So it has both an environmental benefit and an economic benefit.

We have other initiatives under way in partnership, for example, with the Fort McKay aboriginal community on a wood bison pilot project. We have raised wood bison on reclaimed mining areas - you'll see this on your tour this afternoon - and we now have 120 head, a large portion of which have been born at the site. You'll see that they're very much at home in their natural habitat. We hope over the next few years to turn this into a commercial operation that the native community will fully own and manage.

We've been working with the regional municipality on other aspects of environmental performance. For example, we're proceeding with a health study for this whole region on the effects of plant emissions on human health. It's a cooperative federal-provincial-local study, and includes industry and all the health departments at those three levels. It'll be a leading edge assessment of what effect emissions might have in this region, if any, and of what additional actions we should be taking, if any.

Another key activity locally is the regional air quality coordinating committee, which looks at air quality issues in the region. And just to give you a sense of our continuous improvement in those areas, between Syncrude and Suncor we have reduced SO2 emissions in this region by two-thirds of what they used to be while increasing production by 60% over the same period. That's the kind of commitment we're making going forward into the future.

Finally, that takes me to a few recommendations for you to consider in terms of what the federal level of government might do to support rural development, and the first one we'd highlight would be to continue with implementation of the national oil sands task force recommendations. On that point, I'd like to thank all members and all parties for their support, and Minister Anne McLellan for the support that was provided to the oil sands task force, especially in the fiscal area on the tax system - making it a level playing field for the industry and providing some certainty in that area.

There is also the commitment the federal and provincial governments have made to the elimination of regulatory overlap between the two jurisdictions. Those are two fundamental pieces for the growth of this industry. We'd encourage that this fiscal system stay in place with some predictability for the long term, because it's for that reason we have new investments being announced.

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Our one worry in that area is the recently announced level playing field study of the total tax system. We'd want to ensure that it has the proper and appropriate analysis, taking into consideration the long-term horizons that there are for oil sands investment and the big capital commitment that's made up front in our projects. You're going to see a lot of that hardware out there. It's hundreds of millions to billions of dollars that have very long-term pay-out periods. The system today recognizes this, and we hope that in future reviews of the tax system this will be taken into consideration.

The other thing the current fiscal system does is encourage investment in environmental projects the way it is now structured, and that's also important for the future to encourage investment towards environmental and energy efficiency improvements. It does do that now and we'd hate to lose it.

Another area where the federal government can lend support is around the partnerships with local and provincial educational institutions, especially for delivery of programs locally. I've mentioned a few of them in my remarks. But we think it's important to encourage life-long learning among our entire workforce, not just the 30% who happen to have university degrees but all of the workforce, and especially the trades and technologies. Part of that means ensuring that there is a skilled and mobile workforce in Canada, given the number of resource projects under way. In Alberta alone, in addition to the oil sands, with the other petrochemical, forestry and agricultural projects, it amounts to $17 billion over the next decade of announced programs going ahead. So that's going to further add to the demand for trades and technologies and science-based education in this country.

We think that continuing support by Human Resources Canada is important in this area. They are involved in the Careers - The Next Generations program. They're on the steering committee. We'd sure like to see that continue. There are proposals being put together around what infrastructure support might be needed for that. Industry's commitment is to provide the jobs and the employment, and we're putting millions of dollars into that program. We think that both levels of government need to ensure that the educational delivery system and the training support programs are there to help round it out and make it happen.

Another area we think needs more focus is business literacy for employees of all companies. It's something we've undertaken in our company to help employees understand better the fundamentals of operating costs, profit and loss, and cashflow. It's important to all businesses, small and large, for people to understand that better, because the extent to which businesses can thrive and prosper is going to increase employment opportunities and grow the national and provincial economies, and as a result of course government revenues will also be increased.

Finally, we think the federal government should work to expeditiously resolve native land claims, some of which are in our area. For example, Fort McKay has had one outstanding for a number of years. Those should be addressed. That's going to facilitate orderly and responsible development in the oil sands area and in our region.

Not shown on page 9, but something I'd add as a note is about infrastructure programs. We believe they should be very focused towards some specific objectives such as economic development objectives or educational programs. If I were to pick a couple of examples in our region, with all of the oil sands development it's going to need additional highway work and road work. But that would be a focused infrastructure program that took into account the economic development priorities in the region as opposed to just making a pot of money available.

Likewise in the educational area, which is the other focus I've talked a lot about, there's infrastructure needed there around supports to education programs. The knowledge infrastructure, if you like, around videoconference facilities, interconnectivity of PC hardware, software, all of that's very important to local program delivery now. We've done a number of things in our region to support it, and we think that kind of support from both levels of the government in the future is going to be a continuing need.

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In conclusion, we believe our ultimate competitiveness in Canada and our standard of living rest on the ability to provide employment and education opportunities to all Canadians. We're very fortunate in this region because we have the oil sands resource. We have some recent policy changes that have encouraged development of that resource. We have the technology and the people and the ability to make it happen.

Our planned capital investment programs are going to generate significant social and economic opportunity. With additional work on the educational and training areas and on focused infrastructure, we think it's a great opportunity for this region and its rural development to proceed.

Those would be my opening remarks.

The Chairman: Thank you very much; we appreciate that. I call upon Mr. Asselin for some questions.

[Translation]

Mr. Asselin (Charlevoix): I would like, first of all, to welcome you to the committee and to thank you for your excellent presentation on manpower training. As an employer, you are vitally important to the rural development of that region.

Your firm probably has a hiring policy. Would you tell us something of your employment standards? You have told us what percent of your employees are native people and you have also said that you hire women for non-traditional jobs, including jobs as operators. Would you tell us whether you have developed a hiring policy that provides for training or whether you hire people who are already qualified and experienced.

Finally, I would like to know how much your firm spends each year on training its own personnel.

[English]

Mr. Lechambre: Regarding our hiring policy, our fundamental policy is to hire the most qualified person for the job. In addition to that, in our aboriginal or native program areas we have targeted very specific areas for training and development of native people, and we have worked with the communities on identifying potential employees.

We've supported some education through scholarships, for example, aimed at getting grade 12 equivalencies; working with Keyano College, for example - they have delivered equivalency programs that native communities have been able to take advantage of. In the native area we have specific objectives we try to achieve every year.

Our ultimate goal is for the percentage of employees at Syncrude to be representative of the percentage of natives in the region, and that's probably in the order of 13% or so. When a native employee leaves Syncrude, our policy is to replace them with a native employee. In addition to that, we'll keep hiring and having focus programs until we get up to the 13% to 14% level in our workforce, and then we hope normal process will take over in that area.

In all other areas of the company, including women in non-traditional careers, people compete on their own merits and the best people that are qualified are hired.

In the education and training area, we've spent 5% to 7% of our payroll on training, education and on-the-job development. At 7% that's in the order of $18 million. It's much higher than the Canadian average, which I think is still around 2% for industry across Canada, although a recent study by BCNI I think has found that of their companies surveyed, they're approaching the 4% mark.

I hope I've answered all your questions.

[Translation]

Mr. Asselin: Alright.

[English]

The Chairman: Mr. Serré.

Mr. Serré (Timiskaming - French River): Thank you, Mr. Chairman.

First of all, let me congratulate you on your presentation and on the work you've done so far. I'm really impressed with your performance in terms of involving the community and developing partnerships with the different stakeholders, and labour training, and what not.

Being from a rural riding and having seen many single-industry towns pop up and close, it seems the problem we face is that once these projects are gone we are left with dying communities. There have been suggestions that we could do something like they've done in Alberta with the heritage fund.

First of all, is your company doing anything in terms of developing diversification in the economy? Secondly, what would you suggest for ensuring that once this project is over in 20, 25, 30 years, or whatever, there will still be a thriving community in the region?

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Mr. Lechambre: On the point of the longevity of our industry, the reserves here are enough for 400 years of Canadian crude oil supply. So to the extent that there is still a demand for crude oil or its products, we'll be here. That's one of the advantages of this region.

With just the current leases that our company alone owns, we have over 80 years of supply, and we can extend that by developing other leases that we currently don't hold. The same would be true for other companies in the region. So it's a very long-term time horizon.

Beyond the oil and the oil sands, there's a potential for minerals recovery - titanium, zirconium, and even some amounts of gold. There are a number of mineral development companies looking at that now. That would be a spin-off industry potential in this region. Though at this time there is nothing commercial, there is a lot of development work going on to explore those opportunities.

Our company specifically is not looking at anything beyond those two areas, because our business is oil, and perhaps minerals down the road.

There was another part of your question that I've missed.

Mr. Serré: It's perhaps not specific to your company, but in general terms, do you have any suggestions on how we can ensure single-industry towns in rural Canada thrive economically once the particular mine or project is done with?

Mr. Lechambre: There is also some forestry development in this region, and part of our reclamation of our mine areas is to reforest into harvestable timber quality. That's another opportunity area down the road, once we've finished the oil sands extraction, and you'll see some of that reclamation on your tour.

As a side comment, we tour about 4,000 people a year in our operation. Tourism is our secondary line in our company, actually. Tourism has really grown in this region.

As for the wood bison project, commercial ranching of bison and/or other cattle looks very promising, and it's an opportunity for more economic development as well.

Given the long-term time horizon of the oil sands, along with those other industry opportunities, I think this region is good for quite some time.

Mrs. Cowling (Dauphin - Swan River): Mr. Chairman, because the time has run out, I will leave my question until we're on the tour and I'll pose it then. I just want to thank the people for coming today; it's been very informative.

The Chairman: Thank you. I will, however, as chairman, go overtime and ask a quick question.

You talked about the infrastructure program and you made comments about it needing to be focused. I'm wondering, would your company be a partner in an infrastructure program?

Mr. Lechambre: I guess it would depend on the program, obviously, but for example, in the education area we already are. We have put significant dollars, both cash and people, into the Careers - The Next Generations program and into the industry training centre, into some of the education curriculum development. We have put millions already in those kinds of things, because we think industry's role is to come to the table and provide the employment opportunities and to put some of that funding up front. At the same time, we pay significant royalties and taxes, both federally and provincially, some of which should be going towards that. So there's a balance there, but yes, if a program were focused and it fit with our industry needs, we'd be open to ideas.

The Chairman: Good. Thank you very much. We look forward to the tour this afternoon and appreciate your testimony. It was very well received and very detailed. Thank you.

Mr. Lechambre: Thanks.

The Chairman: I'd like now to call on our second witness, His Worship Mayor Guy Boutillier from the Regional Municipality of Wood Buffalo.

Mr. Guy Boutillier (Mayor of Regional Municipality of Wood Buffalo): Thank you. Also joining me this morning is Mr. Jim Carberry, deputy mayor.

The Chairman: Thank you. Welcome.

Mr. Boutillier: Thank you, and welcome to our municipality. Thank you for bringing the lovely weather with you. I might say that it was 25S Celsius the day before you came and we were out golfing.

The Chairman: We'll take your word for that.

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Mr. Boutillier: Just remember that came from a politician.

Some hon. members: Oh, oh!

Mr. Boutillier: It's indeed a pleasure for the deputy mayor and me to be here representing our 10 councillors on the regional municipality, which you may not be aware is the largest geographically in all of North America, spanning almost 70,000 square kilometres.

We're here today to talk about what we have done, where we're at and where we would like to go. We have some recommendations for your committee in terms of what we've learned as a history and what we can do for the future.

I will leave your committee with an economic profile of our community and region for your perusal.

Our regional municipality is a large and diverse one. It goes back many years and makes up over 11 communities in this region. One of the oldest in all of Alberta is part of the regional municipality, that of Fort Chipewyan. I understand later this morning Lawrence Courtoreille, also a member of the regional council, will be presenting as well.

Look around and you'll see the diversity we have in our region, with our community and industry working together. We're very proud of the partnerships that have been formed with industry. I want to single out specifically two companies, Syncrude Canada and Suncor, for their work with their communities in helping develop this region and bringing both the urban and rural communities along.

One of the most important issues we see in the future is that as industry continues to do well and bring the community along, it's going to be very important to continue to develop partnerships with government and industry and also with other institutions, such as universities and colleges.

Work has been developed towards that end, because we fundamentally believe that as we move forward in regional and economic prosperity, one of the key elements and ingredients of our success in the future will be training our people. Both in this urban area and in the rural area, we have some different levels of experience.

We are very supportive of and encouraged by the good work that Syncrude Canada and its partners in education and Suncor are doing to help recognize the opportunities that lie ahead in the future. Once we know what the opportunities are, we can begin to train for the future in terms of understanding the skills that are required.

My belief is that government, business and academic institutions need to continue to build a stronger partnership. Also, this partnership must take place at all three levels of government: federal, provincial and regional-municipal.

At this point Deputy Mayor Carberry wants to comment on some of those partnerships that we are continuing to build on.

Mr. Jim Carberry (Deputy Mayor of Regional Municipality of Wood Buffalo): As the mayor has pointed out, if you look at the composition of this council, we have aboriginal people and non-aboriginals working together, doing our best to ensure that the people are represented. We're trying to build capacity in the outlying areas to ensure that the people in the outlying areas have the opportunity to participate meaningfully in the ongoing developments. That's very important to us.

In The Edmonton Journal this morning there was a comment on the gap widening between the haves and the have-nots. In Fort McMurray the people are quite affluent. In the outlying areas it's not the same degree of affluence nor the same degree of service.

We are very cognizant of that, so as the mayor has pointed out, we are working to do whatever we can do along with other stakeholders in the region - and you'll hear from some of them - to help build a capacity in the outlying areas so they're not left 50 miles behind.

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Mr. Boutillier: To continue on that point, I think that in forming partnerships with other levels of government and in working together to improve such things as transportation facilities and infrastructure, the infrastructure program launched by the federal government has been a very positive influence on this region in terms of the ability of federal, provincial and community to make contributions towards that end. I might add that many of the community contributions were driven not only by the municipal government funding sector, but also from community groups that were willing to invest their time and energy in particular projects. We have been encouraged by that process, and we are of course very supportive of future processes that tend towards it - and especially in the rural communities, I might add.

Infrastructure in the rural communities is something that is a high priority for the regional council. Imagine that in this region you can live in a half-million-dollar home, yet not more than five to ten kilometres away there are homes that actually do not have, at this point, essential services such as water and sewers. Over the past year and a half, the regional council has made a commitment that everyone would enjoy the basic essential services, no matter what region of Canada they live in. In our region, that is certainly a commitment that we're living up to, and we're very proud of that. We believe the infrastructure program, in forming partnerships with a variety of sectors - provincial, federal, and industry if it is appropriate - is of benefit to both the community and the region, and we support this type of initiative.

What the municipality is looking for today is a continued emphasis on the importance of infrastructure, specifically in the rural community. There clearly continues to be economic disparity in the rural community, but as one of the chiefs had indicated in the past, I might say that if Fort McMurray is doing well the rural community will continue to do well, because there is an overspill of that economic benefit.

What we want to do is be able to work - and even advantage the region - in order to give the people the opportunity to work through training and to meet the opportunities. By the millennium, we believe the new opportunities are going to come through training of our young people. The question is how well the urban and rural communities are going to be trained and skilled and experienced and ready to meet those opportunities. That's a concern of ours. We believe that through the partnerships with Syncrude, and in working with academic institutions and community groups, that will be a very important role as we near the turn of the century.

To get down briefly to some of the details, we are in a situation now in which we have a very navigable waterway referred to as the Athabasca River. It goes north, of course, and spans the Northwest Territories. It is considered the major roadway, so the speak, connecting the eleven communities within this region, going to Fort Chipewyan and Fitzgerald.

In terms of being able to continue dredging on the Athabasca River, our concern is that with the reduction of funding, what is really being said is that our roadway is going to be closed. How would any community feel if the mayor of that community was told its roadway was going to be closed and the $1.5 million to $2 million that have been spent over the last twenty years are no longer going to be there? And by the way, that's just part of downloading responsibility.

That is a roadway that we believe is certainly more than just the responsibility of the municipality. We take very seriously our responsibility in connecting the eleven communities in this regional municipality, but to close that roadway? And we would call it a primary roadway in terms of the safety and concern of travelling on the Athabasca River.

I might also add - and maybe our deputy mayor can comment on this - that the winter road is only a seasonal type of transportation mode.

Mr. Carberry: Thank you, Mr. Mayor.

First of all, on the dredging, the municipality - along with the chiefs - did meet with the Hon. David Anderson in Ottawa six weeks ago. We did indicate to him, and he agreed, that there was no consultation with regard to removing the dredging. It was simply what we were told. We indicated to him that we understand about downsizing but that we expect to be consulted and would like an answer with regard to some proposals we put forward.

To this time, six weeks later, we have not received an answer. We would like an answer so that we can do some planning for the future. If tourism is really going to take off north of here and is going to help the communities, especially those of Fort McKay and Fort Chipewyan, that river is very important. Tourism really hasn't been scratched in that area. Those people could really develop it, but they need the river and the opportunity to look at it.

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With regard to the winter road, it was initially put in by the people of Fort Chipewyan about ten years. They did it on their own, without government assistance. They paid for a dozer, got authorization from the trappers, and put the road in. That's how much they value that road. Today it costs this municipality something around $600,000 a year just to keep that road open for four or five months in the winter in order to give those people the opportunity to shop, to spend their money in Fort McMurray, to pay prices that are reasonable. If you visited Fort Chipewyan and looked at the price of milk or potatoes as compared to those found here, you would get one heck of a surprise.

So that road is very important for the future, but you all know that roads are expensive. What the mayor is saying, though, is to look at the moneys - the taxes, the royalties and so on - that leave this region, and at what comes back to help us develop the infrastructure that most of the southern areas have and that we do not have. We would like you to be cognizant of that.

Mr. Boutillier: As a final note on fostering collaboration, building linkages means more than just people linkages. We think it's critically important because of the mere size of our regional municipality. We're talking about almost an eighth of the province of Alberta. That is quite a size, yet it is a regional municipality's responsibility. We really believe this responsibility must be shouldered, and it's no different from our national dream in connecting with a railway or the Trans-Canada Highway. We believe that if we are to have our rural communities develop with the economic opportunities available, then we need to have them linked together. They were linked together before, and now we're indicating that we're not going to be receiving support to sustain that linkage with the northern parts of our regional municipality.

It is critically important that this linkage be maintained. The benefit will ultimately be its people and the economic opportunities that are going to be fully explored through the linkages that we are developing. And I might also add that by developing this resource, there will be assistance in continued resource development pertaining to things such as forestry. So if there are natural fits in terms of having industry working where it can help to build roads, where it's a good situation for them and it's good for our community, we see it as a win-win and we think it's certainly worthy of further exploration.

I want to take the opportunity this morning to also thank our member of Parliament, Dave Chatters, who has been very helpful in working with us at the federal level. I might also add Anne McLellan in there in terms of some of the issues that we've been dealing with.

I also want to say that we would welcome the opportunity to be able to sit down with the federal and provincial governments and our regional municipality collectively. So often the municipality - the mayor, deputy mayor and council - will meet with the province, and then we'll meet with the federal government. It sure is nice to get everyone under one tent occasionally to be able to talk about things of such importance that affect our municipality.

I just want to conclude by saying that our deputy mayor, of course, has been a part of this region for over thirty years. He has lived in the north, and I can say he speaks with a considerable amount of experience in terms of what can be fully explored and developed in the north. I certainly hope you will therefore value even more so someone who has lived in the north - including in Fort Chipewyan - for many years.

The Chairman: Thank you very much.

I think I'll begin with Mr. Chatters, and then I'll go to Mr. Asselin and Mr. Wood.

Mr. Chatters (Athabasca): I don't really have any questions. Being part of this community, I am pretty familiar with what's going on. After hearing the presentations yesterday, however, I think there are some real lessons to be learned in other parts of Canada based on what's going on here, particularly in the partnering in the education sector that's going on with the industry here in Fort McMurray.

As we heard time and again yesterday, the biggest roadblock to including particularly aboriginal people in resource development in the north is the lack of education. I think Syncrude and Suncor, through this partnering program with the primary schools and with Keyano College, are doing tremendous work in removing that roadblock. I think the committee should take real note of what's going on there.

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I'm not making the presentation this morning, but I would also ask my colleagues to help us with getting some kind of response from the Minister of Transport on this dredging issue. We really need this to plan and to go forward. I think it would just be courteous to have a response as quickly as possible.

The Chairman: Monsieur Asselin.

[Translation]

Mr. Asselin: My question is for Mr. Boutillier. Would you tell us, sir, whether your municipality or any of the nearby rural municipalities depend solely on the oil sands that are being developed, by Syncrude notably? What would happen if, tomorrow, the oil sands and the Syncrude corporation were suddenly faced with some heavy competition in the market place, if their operations were no longer profitable and Syncrude decided to shut down?

I am thinking, sir, of mining development on Quebec's north shore. We all remember how popular asbestos used to be in places like Asbestos and the Abitibi region. Today, the mines are shut down and the workers, both men and women, have had to leave those areas.

I'm also thinking of the north shore, in the region of Sept-Îles. Gagnonville has shut down. The town of Gagnon has been bulldozed. The schools, hospitals and all the houses were taken down because the workers had to leave Gagnonville since the iron mines was being shut down.

I'm also thinking of Schefferville and of the town of Sept-Îles which, with the expansion of the iron mining industry, had set up an infrastructure which would have allowed the town to accommodate a population of 50,000. Today, 10 years after the mine was shut down, the population of Sept-Îles is down to 20,000. That is very costly for a municipality and very disturbing for municipal officials.

Do you really depend, then, on Syncrude developing the oil sands? What would happen if, tomorrow morning, Syncrude shut down its operations because of something that happened in, say, Iraq, or because of various developments in other countries?

[English]

Mr. Boutillier: Politicians have always been taught never to answer hypothetical questions, but I'll endeavour to do this.

First of all, I think the key to Syncrude and Suncor is they are economically viable. I have a great deal of confidence that Syncrude and Suncor will not be shutting down.

Let me explain my reason for saying this. They have adjusted their mode of operation to be competitive. In June the Prime Minister was here with a variety of stakeholders from across this country related to private sector investment. The key to the future of Syncrude and Suncor is going to be through private sector investment, and this is taking place. It is not because of an artificial inducement by government. It is solely because today Syncrude and Suncor are very competitive. They have adjusted their operations so they can be sustainable into the future.

I think your question is a good one. I think it's a question both Syncrude and Suncor were asking about five or six years ago. Today, in order to avoid this, they are very competitive. West Texas crude can be trading anywhere between $20 and $24 even though the provincial government budgets it to come in at around $18. Their costs have been the economic engine of attracting investment. The cost of producing a barrel today is around the $13 mark. I might add that 15 years ago it was over $30 a barrel.

What is attracting the private sector investment is not artificial inducement by government. I believe private sector investment is the key to our success. Consequently, I do believe we are very dependent on these two companies. Syncrude is one of Alberta's largest employers. This does have an impact in our community.

But I feel good about the diversification taking place. Today our forest industry is developing. We have many complementary businesses beginning to develop. So this is encouraging and expanding our economic base. Syncrude and Suncor are major players in this region, but I'm proud to say they're not acting as if they're monopolies. They're contributing in a very positive way to our community, and this is helpful.

I believe the dilemma in Canada today is we simply do not have enough people. In this regional municipality we have just over 40,000 citizens, in a municipality that is larger than the provinces of Nova Scotia and Prince Edward Island combined. That's how large our municipality is. So we lack people in terms of being able to continue to develop this rich resource we have.

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I would hope in the future that through continual development of natural resources we will continue to have more people and develop a stronger economic base so that we continue to diversify our economy, so that we are not solely depending on simply the oil sands. But I'm not going to make any apologies in terms of being dependent on the oil sands, because the good thing about this natural resource is that it's going to be around for the next 300 years, and that is a very positive sign in terms of what the future is for this region. We do have the energy, our people energy and our natural resource energy.

The Chairman: Thank you. Mr. Wood is next.

Mr. Wood (Nipissing): Thank you, Mr. Chairman. I want to pick up on somethingMr. Carberry was talking about, and that's the dredging. I'm not too familiar with it, but I had a chance to talk to Mr. Chatters yesterday about it. I sense a little bit of frustration in dealing with the transport department.

What were some of the proposals? You vaguely went over them, Mr. Carberry. Can you elaborate on a couple that you might be able to get a handle on?

Mr. Carberry: When we spoke to the minister, we indicated to him clearly that we understood the necessity of being effective and efficient, that we were not going to whine about the fact that the federal government was putting quite a bit of money into building a winter road in northern Saskatchewan once the barge service came off.

What we asked for was six months in which to be able to sit down and assess the situation with regard to what condition the barge itself was in, the markers, and the other equipment, and secondly, to work with the community leaders in Fort Chipewyan to look at what other options there were in terms of road development and in terms of whether or not we could get private sector partnership to look at carrying out the dredging service.

Third, we asked the federal government to consider giving us a grant of $10,000 to carry out those assessments and do the travelling that would be necessary between here and Fort Chipewyan and so on, to get it done.

But the $10,000 wasn't a big item. If we could get the first couple, we would be more than willing to put the money in ourselves. So that's basically what we asked.

Mr. Wood: You did offer some cost-sharing proposals.

Mr. Carberry: Yes, we did. What we really needed was time to evaluate before we decided that we would make an offer to take over the dredge. We don't want to buy a pig in a poke, if you know what I mean.

Mr. Wood: So how important is it to have an answer?

Mr. Carberry: It's very important for us to have an answer, not just for us but for the community of Fort Chipewyan, because if there's no dredging there are no barges. If there's no barging, they're going to have to haul everything to build houses and everything else over the winter road. So that means they need lead time.

They also need an answer on the question of financing, especially the bands. If they're going to be building houses and they're going to need some material for 15 houses, that's a lot of money. If they're looking at the money from Indian Affairs, you know, Indian Affairs doesn't give them the money until next April or May, so they'll probably have to look at the whole question of financing and bringing the material in. The big problem is that it's going to interfere with the development in Fort Chipewyan, but it's also going to interfere with the development of the tourist industry in this region.

Mr. Wood: How much money are we talking about? You mentioned $1.2 million over three years. Is that right? What were your figures?

Mr. Carberry: For the barge?

Mr. Wood: You mentioned $1 million for dredging. What was the...?

Mr. Carberry: For the dredging, it was running at about $1 million a year between here and Lake Athabasca. But our own people - I'm talking about the city administration and transportation utilities - believe we can do it for a heck of a lot less.

But what we do need to do is to find out what condition the dredge is in. In other words, if it's going to cost $500,000 to refurbish the dredge itself, we need to know that pretty quickly so that we can work with some individuals who are interested in the barging, who might consider partnering with the municipality in some kind of joint venture where the river would be dredged and the channel would be kept open.

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Mr. Wood: Do you have people who are interested?

Mr. Carberry: Yes, we have some people who are interested. But they would also like to know the financial status before they put their money down.

Mr. Wood: I think I already know the answer to this, but I want to ask the mayor one quick question. What is the best way the federal government can stimulate the economy, to your mind? We're asking a lot of witnesses this so we get a handle on the one thing the federal government could do to stimulate the economy. Mr. Mayor, what's your number one priority?

Mr. Boutillier: History is a great teacher, and I can only say the best example is seeing business promoting and fostering an environment that will attract private sector investment. The fact that in our community in June there was a commitment to spend $6 billion - that's with a ``b'', not with an ``m''; $6 billion - in this Alberta economy and in this region for the oil sands.... I think the federal government, through the fiscal regime that was worked out between the federal and provincial governments, is truly the best example of governments working together to foster an environment that will attract private sector investment. We support that. We don't support artificial inducement of government funding into something that is not really market driven.

I can say today that the announcement in June, when the Prime Minister and other partners and stakeholders were here, was truly a great example of governments working together in setting that environment. Please pass on to all those in Ottawa the word that we've appreciated it. It truly is a success story - which means you will not read much about it in the future.

The Chairman: Mrs. Cowling.

Mrs. Cowling: Thank you, Mr. Chairman.

Mr. Carberry, you mentioned you've spent a number of years in the north. One of the things we have found through this study is a lot of depopulation happening in rural areas. Can you paint a picture for us so we can understand what has really happened in the north? Has there been a factor of depopulation?

Mr. Carberry: That's interesting, because initially my accent didn't tell you I'm from Northern Ireland. Ireland and Northern Ireland export about 30,000 young people every year, educated young people, because there are no opportunities. In the outlying communities really the same process is happening. Especially the young aboriginals are getting more and more educated, and where there's very little opportunity to work in their own community they're doing what all young people do, they're coming to Fort McMurray and other places to find opportunity. That goes hand in hand with education. When you educate young people, they're going to go and look for the opportunities to use their skills.

I lived in Fort Chipewyan from 1969 to 1976. In that time they had a great history of high school graduates. Most of those graduates are living out here, working at Syncrude or Suncor. They have families. Most of those in Janvier and Conklin, in the southern part, come to Fort McMurray for their high school, and a big majority of them get employment here, or they get employment at the plants, and they relocate right to Fort McMurray. So those communities also have the difficulty of building themselves up when their smartest young people don't go back.

There's no question that in the aboriginal communities especially in this area the numbers do go down, and I believe that will continue to some degree. In one sense we have an oil community, where people who don't like the really fast pace of Fort McMurray, people who are earning big money at Syncrude and Suncor, have...what do you call that...?

Mr. Boutillier: They have a rural atmosphere that is in proximity to our municipality. It's country-style living, yet close to the city.

Mr. Carberry: That population is increasing.

The Chairman: Thank you very much, gentlemen. We very much appreciate your testimony and the hospitality of your community.

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The Chairman: Our next witnesses are from Suncor. Good morning and welcome. We ask you to make an opening statement, and then we'll open it up to questions from our committee members.

Mr. Terrance J. Bachynski (Director, Project Approvals, Suncor Inc.): Good morning. Ken Hart, our vice-president of human resources, was slated to be here this morning, but he contacted me last week and indicated he had a conflict. He asked me to come in his place on behalf of Suncor. I work with Suncor as the director of sustainable development. My work is principally focused on the growth initiatives that our oil sands operations are pursuing at this time.

I have an overhead presentation, if that's all right. And I apologize, but I'm suffering from a cold, so when my voice fails me it won't be because of nerves or embarrassment or anything. It's a physical limitation that I'm suffering through this morning and I apologize in advance.

Basically, I'm here this morning to share with you what Suncor is doing right now with respect to our growth initiatives and how that is impacting the community of Fort McMurray and the Regional Municipality of Wood Buffalo as a whole. I'll also be talking to you about some of the work we're doing to encourage local businesses and aboriginal businesses to develop work and to find work in our region, and about what we're doing with the aboriginal communities to encourage development within the community and to encourage retention of strength within the community.

Earlier Jim Carberry referred to the phenomenon whereby we encourage rural communities and aboriginal communities to educate their youth and provide them with skills. We support those sorts of initiatives, but the outcome is that the strength of the communities - those who are well-educated, who have a business bent or who have interests that way - ends up moving away from the community.

So with the communities, one of our efforts is to find ways of keeping that strength in the community. A lot of these people experience a sense of loss when they move away from their communities. They have conflict. They enjoy their traditional lifestyles and the heritage that comes with living in their communities, but they also have that flavour for the North American culture and what is available in the larger urban centres like Fort McMurray, Edmonton, Calgary or wherever. I'll be talking to you later about how we try to strike a balance and answer both of those concerns.

You've probably heard either from people here speaking to this committee or through other sources that there's a lot of activity in the Fort McMurray area right now . Mayor Guy talked about these announcements this past summer that indicated that as much as $6 billion, I think he said, will be invested in the oil sands industry over the next number of years. That's quite a large sum and quite a lot of activity. There are a lot of things going on with expansion plans at both Suncor and Syncrude as we speak.

What we see in these expansion plans is reflected in some of these slides. Although there is a lot of activity, it will not be generating a huge boom in population growth or that sort of thing. What it really does is provide economic stability in the region for a long period of time.

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Not that long ago, five years ago, Suncor's oil sands facility was actually looking at shutting down around the turn of the century, when our existing leases would be mined out. We were actually pursuing a plan indicating that in 1990-91. To go from that point of view to the point today whereby we see a long-term commitment and development in the oil sands industry is quite a turnaround. It's quite a turnaround for the community too.

So the work we're looking at really secures the jobs of those who work for us now. These are the 1,700 people who work for Suncor either as permanent or contract employees. This secures their jobs and that of their children and children's children. That's really what we're about. We're about sustaining that kind of development and commercial activity in this region for the long haul.

So we foresee rather modest changes in actual population increases with the growth plans we are currently pursuing both in Suncor and Syncrude. We see that this community, region and current infrastructure support that kind of growth.

During our construction phases, we're going to have a lot of activity. There will be a lot of extra people around. We always have some contract workers on our site doing various project work.

The growth initiative, specifically dealing with our new steep-bank mine and our six planned expansion projects, will bring in a casual workforce. We see those numbers varying over the course of the projects, but that will go up to around 800 or 1,000 additional workers on our site during peak construction times.

As part of the analysis of these projects, we've examined the existing infrastructure in Fort McMurray. We've determined that it can more than adequately support these kinds of numbers in the short term. The permanent change in employment can easily be taken care of with the existing infrastructure.

I mentioned earlier that we are very keen in creating opportunities for local and aboriginal businesses. Our approach is consistent with both. We try to ensure that the work we are proposing to undertake is packaged in a way that maximizes the opportunities for local and aboriginal businesses.

We're not about guaranteeing work for local or aboriginal businesses; we're about maximizing their opportunity. Whether it's an aboriginal business or a local business, we say that you have to be able to compete on price, quality and the ability to deliver. As long as you can compete on those three criteria, and you're a local or aboriginal business to boot, then you've got a much better chance of landing that work than a business that is not from this region.

All of our principal contractors - they are the general contractors for our projects - have very strict guidelines from Suncor that favour local and aboriginal businesses. We really encourage that. We set a target range of 15% to 20% for a project, which means that 15% to 20% of that should be able to be executed by local or aboriginal businesses.

Our last large project, flue gas desulphurization, cost $190 million. I believe that about 25% of the value of that project was contracted to local or aboriginal businesses.

There are things that obviously cannot be done, such as the fabrication of large vessels and that sort of thing. You just don't have the ability to do that here. But to the extent that it can be done locally, we strongly encourage that.

So how do we create these opportunities? We've taken a slightly different approach in the most recent project, which we think is quite good.

Much earlier in the process than ever before, we identify the work that's going to become available. This is so that local and aboriginal businesses know about the work perhaps as early as four years before it is actually going to be done.

That tells them that there are packages of work. We break it down into packages of work that we think make sense. Here's a contract. This contract is going to be let in 1997. Tenders will be out around this time. There's that kind of level of information that lets businesses get ready.

So even today, if they say they're interested in something but they're not ready for it - if that came up today, they couldn't handle it - they know it's coming two years from now and they know what they have to do to get ready for it. This is so that they're in a position to bid for that work. They'll have as good a chance as anybody about getting that work.

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We think that the earlier the information is in their hands, the better it's going to be for them to be able to be prepared to tender for that work, talk to the people to whom they need to talk to find out what is required and be in a position to take advantage of those opportunities.

As I said, a similar approach for aboriginal businesses is for us to get the work packages out very early through their business associations or directly to the aboriginal businesses themselves if they are already on our bid list and actively doing work with us. They have this information early. They know what they have to do to get ready for this work. If they need help getting ready to bid for this work, we're always open for that. People do come to us and say that this is something they know they can do, but they just need some help to get ready for it. We find ways to assist them to get ready for that work.

In the right circumstances, we have other work going on with aboriginal organizations to identify business opportunities that perhaps were missed before. There may be situations in which they say you're right for this work, so let's work together to make this work for you. We'll get you in here and help you get going. We'll help you get your organization together to allow you to execute this work for us.

As I mentioned, we deal with business associations. The Northeastern Alberta Aboriginal Business Association is one group we work with. This is one avenue by which we get to interface with aboriginal businesses as an association. In other aboriginal businesses, we deal with them directly.

So that sort of addresses doing business with Suncor on our site and that sort of thing. But what do you do about developing the communities? I mentioned this earlier.

We have established a long-term strategy to address this drain of resources from the communities whereby you get the well-educated people, those who want to pursue certain careers, moving away from the communities and really taking away strength. Perhaps in some cases some one would say this is taking the future of the community away.

So how do you keep that strength in the community and still address their desire to be self-reliant, self-supporting and adding real value to their community and society?

We have a very active aboriginal affairs activity going on within Suncor and with the aboriginal communities. We have what some people have called the alphabet committee, because it's ABCD, aboriginal business development committee. The ABCD at Suncor is comprised of probably 30 or 40 Suncor employees who have volunteered to do this work.

This committee is broken up into a series of small committees that have taken on the task of working with individual aboriginal communities to identify business opportunities in those communities that can be started and developed in order to hire residents of the community so that the business resides in the community. That business may be a business that supports activity at Suncor, or perhaps not. Perhaps it's a stand-alone business that just works for that community.

Our business development committee works with the communities to help them identify those opportunities and get organized for those businesses. It gets them started and rolling.

Our aboriginal affairs policy is developed jointly with the aboriginal communities. We don't just sit in our meeting rooms, find something that looks good and get it down on paper. We've gone out to the communities to ask what the needs were. What are the opportunities you are trying to take advantage of that you see for your communities? How can we merge that with what we see so we can add value to your communities and develop these policies and programs together?

We have an aboriginal employment development program. This is basically a trainee program. Suncor has a requirement that anyone working on our site has to have a minimum level of education of grade 12. In some cases, that's a challenge for aboriginal people who want to work and get ahead. It's difficult to get through that level of education for any number of reasons.

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We have on our site 12 reserved spots for aboriginal peoples. These are training-level jobs. These people come in and if they need educational upgrading, we get it for them while they're in the training jobs. While they're in these jobs, they get trained to take on full-time operational jobs. As operational jobs become available, they move into operations and a new trainee comes in. Over time you increase the level of full-time employment with Suncor and keep rolling people through these 12 training positions.

It's a slow process. It's not a magical panacea, boom, everybody has a job, but you can see that over time it can have a significant impact on the quality of employment available for aboriginal peoples.

We recognize that there is an obligation on Suncor's part to provide opportunities for local and aboriginal businesses. We have tried to structure the way we do our business and our involvement with the communities to maximize those opportunities for both local and aboriginal businesses. We also see that it's important to make sure there are educational opportunities so that people can take advantage of the opportunities inherent in Suncor operations. We've shown a willingness and a desire to work very closely with these communities. It's not just our ideas. We have to make sure we understand their ideas and understand their needs first, and find a way for our activities and resources to best facilitate those needs so that we both win.

That's the end.

The Chairman: Thank you very much. Our committee members will now ask you some questions. I'll start with Mr. Asselin.

[Translation]

Mr. Asselin: Do native people have a part in the development of natural resources here? What should resource industry businesses be doing to train and hire a greater number of native people?

[English]

Mr. Bachynski: On the question of whether they are actively involved in the development of natural resources here, yes, absolutely, they are actively involved. The aboriginal businesses in this region get involved in both the Syncrude and Suncor operations either through their group of companies.... They provide support services. They provide certain packages of work that feed into the development of the natural resources.

At Suncor, one example is an aboriginal business that operates our limestone quarry for us. It's their obligation to quarry the limestone and deliver it to the base of our flue gas desulphurization plant, where it is used in the process to take SO2 out of our air emissions. That's a separate, stand-alone business to support our work. Without our flue gas desulphurization plant, we would have a very difficult time being allowed to continue our operations because that plant eliminates 95% of the SO2 emission streams from our operations. That's just one example of aboriginal businesses being directly involved in the business of natural resources in this region.

I think the second question was what we can do to more fully develop the hiring of aboriginal peoples in Suncor, Syncrude or the oil sands industry. Was that the question?

[Translation]

Mr. Asselin: I was asking if, apart from Syncrude, businesses operating in the area were doing in-house training and employing more native people.

[English]

Mr. Bachynski: A lot is going on right now to ensure that we're maximizing the opportunities for aboriginal peoples to be hired in both Suncor and Syncrude, and I'm sure in ALPAC too, although I'll let ALPAC speak for itself. I'm most familiar with what is going on in Suncor, obviously, and I know what is going on in Syncrude too.

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What more can we do? What we can do is to work very closely with the aboriginal communities and find a balance between the desire to meet their needs for value-added employment, value-added work, and the desire to hang on to the traditional lifestyle they enjoy in their communities. That balance is a very difficult thing to try to strike, because in many ways they work against each other.

I don't know if there's an easy or quick answer, and I don't know that providing work and having the aboriginal communities buy into the business culture of ``get a higher education, get a good job'' and that sort of thing...if everyone buys into that, you'll lose the traditional lifestyle in the aboriginal communities. They're different. I think what is important there is to find work that strikes that balance. It may not necessarily be working directly for Suncor but in an activity that can be vibrant within the community itself and that allows communities to run their own businesses, to run activities that generate meaningful work for their people, and that allows them to have the flexibility to marry that with the traditional lifestyle, which is very important to preserve.

[Translation]

Mr. Asselin: Do the native people who work for you pay income tax?

[English]

Mr. Bachynski: I don't know the answer to that. We need a tax guy here. I honestly don't know. Somebody in this room must be more knowledgeable about the tax treatment for aboriginal people.

Mr. Serré: If the money is earned on reserve, it's not taxable. If it gets earned off reserve, it's taxable.

Mr. Bachynski: So if they're working on our site and earning money on our site it would be taxable. If the businesses we are trying to locate within the communities, to run within the communities...the money from there would be tax free.

Mr. Chatters: The oil sands task force predicted the creation of 40,000 jobs over the next 25 years from new development in the oil sands. You seem a lot more conservative than that in your estimates. Where is the difference?

Mr. Bachynski: Actually, they are not different at all; they are not inconsistent at all. I have to tell you that the day when Jean Chrétien was here announcing all this development of the oil sands industry and the 44,000 jobs and the $25 billion we've heard so much about from the task force, being the person responsible for communications and our stakeholder relations for Suncor, I had a lot of problems with that, because everyone read ``44,000 new jobs in Fort McMurray and $25 billion''. But what we have to understand is that one of those 44,000 jobs is the individual who is working in a loading dock in a factory in Montreal where they build rubber seals that go into valves that may be used in an oil sands application. If the person who makes those seals would not have that job but for the valves needed in oil sands operations, that's one of those 44,000 jobs; but that individual is in Montreal.

What we're seeing here, what I've talked about today, is that from the growth plans Suncor is proposing right now, which involve an expansion of our fixed plant facilities and the opening of a new mine, we see a change of permanent employment of only about 100 people. That will begin in 2005, 2007. It will be about 100 people. That does tell us, though, that it's preserving all the work we have out there now, and with the efficiency improvements and changes in technology the jobs may change but the number of people employed is not going to change that much.

To address those concerns we are engaged in a multi-tasking process, so people can float from one job to another; they don't have just a very finite set of skills and when that job no longer exists they're out of work. We want to make sure these people still have work, so as technology changes, as our processes change, they have more skills than a simple, narrow focus and they can move to a new job.

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For instance, we've had a number of people involved whose jobs exist because we use conveyer belts in our mining operation. In our new process we're moving from conveyer belts to hydro-transport. For all those people whose jobs were focused on conveyer belts, those jobs are going to change. We're going to have different jobs and different skills to run an operation that is based on hydro-transport technology.

We want to be able to have a workforce that can move with technology and have more skills than what traditionally would have been a very narrow scope.

Mr. Chatters: Thank you.

The Chairman: Thank you. Ms Cowling is next.

Mrs. Cowling: Thank you, Mr. Chairman.

Mr. Bachynski, I would like to raise questions around jobs and economic growth within the aboriginal community. My question is with respect to aboriginal women. Do you have many of those people on the site?

Mr. Bachynski: I guess it depends on what your definition of ``many'' is. We do have a number of women. I know a number of them personally who are aboriginal and work on our site. Exact numbers on our entire site I just don't know, but certainly a number of aboriginal women work for us in various aspects of our operation, both on the administration side and out in the operation of the mine.

Mrs. Cowling: Also, one of the things we heard yesterday from a number of witnesses was the on aspect of tourism and maintaining the traditional culture in a lot of these communities. I'm wondering what is being done to maintain the cultural end of it. Have you thought of anything with respect to tourism and infrastructure?

Mr. Bachynski: Tourism is a subject that often comes up as an opportunity for this region. We are not taking full advantage of that opportunity and more can be done. It's been a subject of discussion, certainly, but as to specific projects targeted solely for the purpose of increasing tourism, we don't have any right now.

We're sensitive to that opportunity. It most often comes up when we're talking about reclamation of our site and end land use of our site. Once you're finished your mining operations and you've reclaimed the land, a number of opportunities are available for that final reclamation. Some of it may be commercial forest; some of it may be geared specifically for tourism opportunities.

In fact we've proposed something, and virtually everybody I've talked to about this over the last year or so is in favour of it. I've talked to Syncrude about it, I've talked to government agencies about it and I've talked to our stakeholders about it. From a regional perspective, when we're looking at end land use, a lot of reclamation will be done with Syncrude operations and with Suncor in the future.

What we should do is get together and decide what the mix is for that end land use, bring in the end land users, the aboriginal communities and the people who are going to be living here, and ask what this final landscape should look like. Some of it should be commercial forest and some of it should be geared specifically for tourism. We have to take those considerations into account when we're planning our final reclamation and actually executing it.

The Chairman: I have one question to explore as well. From your presentation, I was very impressed with the outreach you're doing with the small business community to give them the opportunity to bid on work and do work for the company.

As to the suppliers of what I would call professional services - accountants, lawyers, auditors and all of that group of people needed to support a large operation such as yours - are you accessing or are you able to access that from the local community, or are you dealing with these big firms in Calgary, Edmonton, etc.?

Mr. Bachynski: Most of it's done outside the region. We do not use local legal services; we use law firms from Calgary and Edmonton. We have our in-house legal departments, accounting departments and tax departments. The lion's share of it is done in-house.

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To the extent that we need outside services of that nature, our auditors are from a national firm and our lawyers are from large firms. I have not been involved in a circumstance where local people in those professions have been used.

The Chairman: Part of the testimony we've heard in Ottawa from a number of different academics studying this issue is that this is a particular area of weakness in rural development. It would seem that a large corporation - not just your own, but several others - might be able to encourage and incubate those professional groups in an area such as this, rather than continually going back to a corporate head office in Edmonton, Calgary, Toronto or wherever it happens to be. Is that something you could see yourselves becoming involved with as a company?

Mr. Bachynski: I would think that most likely in our situation we would be attracting those sorts of skills to work with us in-house.

One of the problems we have found in trying to recruit professionals is in attracting to a remote community the professionals with the skills we need for the work. I know when I was in law school 17 or 18 years ago, if somebody had told me I was going to be in Fort McMurray in 17 or 18 years, I would have said ``Where?'' It would not have occurred to me that this is where I would be. Now that I'm here I can't imagine why I wouldn't want to be here.

It's very difficult, we have found. Our human resources department in their recruiting efforts have found it very difficult to attract professionals to a remote region. It's an odd thing, because I've never heard anybody complain about it once they're here. More often you get people, once they're here, saying they don't want to live anywhere else.

It's a fantastic community; it really is a fantastic place to be. But when you're in law school, an MBA program, a CA program, medicine or dentistry, often your destination point is not a remote community, and that's unfortunate.

It's nice to find the right skill set with the right person saying this is where they want to be. Then you have that magic combination. I'd hire that person right now.

The Chairman: Thank you very much for your testimony. It was very interesting. We appreciate the time you've taken to answer our questions.

The committee is going to take a five-minute recess. We will resume at 10:45 a.m.

Thank you.

Mr. Bachynski: Thank you.

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The Chairman: Thank you very much. We'll begin testimony again.

We have a slight change in the schedule. We'll ask the Fort McMurray Chamber of Commerce - Carolyn Baikie and Katie Wood - to provide their testimony, and then we'll turn it over to questions.

Welcome and thank you.

Ms Katie Wood (President, Fort McMurray Chamber of Commerce): Thank you. I'd like to welcome all of you to Fort McMurray. It's a little cold here today. It's not the normal temperature for this time of year, but bear with us; it's going up to 3 degrees Celsius on Hallowe'en. So we thank you for taking it with you.

The Chairman: That was spoken just like a true chamber of commerce.

Ms Wood: The Fort McMurray Chamber of Commerce takes a special and broad interest in economic and business development in our region. Representing business, we work as advocates for fairness, opportunity and sustainable growth in our community. In fact, and very much in keeping with the activities of your committee, we try to identify and overcome the impediments to reaching our potential. I think that's what we probably have in common here today.

In effect, the goals of the committee and the goals of the Fort McMurray Chamber of Commerce are similar. We want to establish a positive economic and business environment, promote growth and prosperity, and improve the quality of life of our members and our constituents. In short, we endeavour to make our world, Fort McMurray, the north, and all of Canada, a more prosperous land, one that is full of hope and opportunity.

We stand a better chance of meeting our goals if we communicate and cooperate. By your work, your mandate, and your presence here today, you encourage those kinds of partnerships and we applaud your efforts.

This morning I will focus my remarks on issues we believe are of high importance and relevance to the Fort McMurray area.

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As visitors, you have probably noticed that Fort McMurray doesn't quite fit the image of a rural town. As remote as Fort McMurray is, we are in fact a city, and a thriving one at that. Our commercial district, for example, extends far beyond the stereotypical general store and gas station, and in place of the single-family farmstead, our residential subdivisions offer respite from the hustle and bustle of industry and business.

Neither are we rural in terms of our economic clout. Every community is unique, and Fort McMurray's main claim to fame is the oil sands. We have a world-class industry right here in our backyard, an industry that produces fully one-quarter of Canada's oil supply, an industry of national significance and impact, now and for the foreseeable future. This industry significantly affects the gross domestic product of our province and of our country. We don't believe there are rural communities anywhere in Canada that, on their own, carry that kind of economic punch.

Are we trying to exclude Fort McMurray from your review? No, that's not what we're trying to do; we're simply trying to reaffirm your premise that remote areas do contribute in meaningful and significant ways to the well-being of the nation, individually and collectively.

Our economy, as I've said, is very much dependent on natural resource development, and in these respects I think we can encounter challenges similar to those faced by many rural communities across Canada. In the materials your committee has produced, you've introduced the concept of economic renewal in rural areas of Canada. One of the tasks of the committee, therefore, is to recommend measures that would help bring this region back to health. If that's correct, economic renewal is not something we need here in Fort McMurray.

Our local economy is quite strong, and for the most part, our future prospects are bright. I'd rate the performance of commerce and industry in this city between good and excellent. True, much of the new activity is being fuelled by announcements of significant new investment in the oil sands industry, and as long as all goes as planned, we expect this to continue. Additionally, we've also met with some success in our efforts to diversify into other areas, such as forestry, natural gas, and tourism, and we hope to grow from these bases as well.

So our particular challenge is not so much to renew, to get back to where we once were, but to sustain, to build our strengths and capitalize on new opportunities. In the sheer size and impact of the opportunities at Fort McMurray's doorstep I believe we are unique, but I'm sure there are many other strong and healthy communities in Canada, communities striving to reach their full potential rather than simply rebuild from a foundation that, for whatever reason, has crumbled.

I would ask, therefore, that the committee direct its attention not just to economic renewal in rural Canada's resource sector but to sustainable development. I would ask that you extend your view to encompass strength and opportunity in communities on the brink of growth and prosperity, communities that promise to spread and share the wealth, communities such as Fort McMurray and the surrounding region.

Hearings of this nature tend to produce complaints and demands - in general, a long list of ``We want this,'' and ``You should do that.'' As tiresome as statements like that sometimes are, it's true that we can't develop effective solutions until we've defined the problems. I hope I've bucked that trend by conveying the message that in Fort McMurray things are very positive. We have a lot to be happy about and we have an awful lot to look forward to. That is good news, and I hope refreshing to your group, which has probably heard many tales of doom and gloom.

But - and there is a ``but'' - no one's future here is guaranteed. There are always challenges, barriers, and impediments to progress. The oil sands industry calls them levers of development. The knowledge, the drive, and the potential ingredients needed to expand production are here, but a number of conditions have yet to be met, a continuing program of science and technology development, sustainable development, and aggressive marketing among them.

One important lever that has fallen into place is the implementation of an appropriate fiscal regime at both the provincial and federal levels. Not long after that lever fell, the industry announced about $6 billion in new investment. These are projects that with the further anticipated $20 billion of investment will create 44,000 permanent jobs over this country in the next 25 years.

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No one is saying that the oil sands would have stagnated without the labour falling into place. They probably wouldn't have. The expansion probably would have gone ahead, but probably at only one-third or one-half that pace, with the benefits to the rest of the country reduced by a similar amount. If that had happened, we would have considered it a failure. We would have considered it a failure of effort, a failure of vision, a failure of working together to achieve our full potential, and a failure to act for the common good of Canada.

So in Fort McMurray, as positive as our future is, we can still fail. We can fail to reach our full potential. As a community, we have our own levers of development. I'll cover them briefly, and then I will welcome any questions you might have.

Your work plan referred to the inadequacies of transportation networks. In Fort McMurray, we are handicapped by our remoteness and by a transportation infrastructure that is hard-pressed to meet our current needs, let alone the increased demands we can predict for the future.

As you know, roads are critical to the economic development and growth of any region. Roads are a primary pathway for goods, services and people, residents and tourists alike.

We had a major series of forest fires in our area last year that isolated this city from the rest of the world, and let me tell you, it was one scary place to be in June of last year. There's only one road in or out of this community. The fires certainly brought our remoteness home to us. It is frightening in those rare moments of emergency, but it is of enormous economic disadvantage every day of every year.

We are urging expansion of the road system in our region. I realize this bears directly on the need for fiscal responsibility. But we should look at dollars earned as closely we look at dollars spent. With the long-term benefits as clear as they are, building or upgrading the transportation systems necessary to extract and transport natural resources should be regarded as an investment rather than an expenditure. It's an investment in industry and jobs and in the health and future of an entire community, as well as an investment in the communities we ourselves serve.

Much of the oil and gas produced in the Fort McMurray region is shipped out by pipeline. The oil sands industry has identified expansion of this system as a lever of development and initiatives will be pursued over the coming years to accomplish this.

But rail is a viable and necessary alternative for resource transportation and it will remain so for at least the next five years. The key to development and prosperity of the oil sands in the near-term to the medium-term is the extension of existing lines south to the Clearwater River and north to major new developments planned by some of the major industry players.

Rail will also be a major transportation outlet for products of other natural resources. Sulphur, petroleum coke, minerals, and forestry products, for example, are key to our efforts to further diversify the local economy. Our present and future economic health depends on the linkages our transportation system provides, and beyond this there is the growth of an entire industry, an industry promising benefits to Canadians across this country.

Also on the issue of transportation, as my colleagues stressed this morning, is barging on the Athabasca River. It extends to the north, passing remote communities and settlements, and southwest to the national parks. To this day, it serves as a traditional transportation route. Barges still carry food, oil, gas, clothing and other goods north to the many people who rely on the access it provides to meet their basic needs.

The Canadian Coast Guard maintains the river and, through dredging, ensures it remains navigable. But these services, which play a key role in helping remote northern communities to maintain their link with the outside world, will be discontinued next year. If this happens, we see little chance that commercial interests will replace the coast guard. Before long, sandbars and other hazards will render the river unnavigable. A tradition will end, but more importantly, a vital service will no longer be available to those who need it.

I urge the committee, therefore, to encourage the federal government to reconsider the effects of its decision, to carefully weigh any perceived cost savings of shutting down the coast guard service against the human costs of effectively shutting down the Athabasca River as a viable and, in many cases, sole-source transportation route.

Your plan also acknowledged that remote communities tend to suffer from a shortage of skilled workers. That's certainly the case here, and without some innovative actions, we don't expect the situation to improve. In fact, as oil, gas-mining and forestry projects come on-stream, we do anticipate a skills crunch. Ironically, during a period of relatively high unemployment throughout Canada, Fort McMurray may find it offers more jobs than it can fill because of a lack of qualified workers.

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Locally, industry and education have cooperated in an attempt to alleviate this situation. We have an industry trade centre here in the city, formed as a partnership between Keyano College and Syncrude. Recently the mining engineering program at the University of Alberta in Edmonton was the subject of some economic renewal, and we hope to bolster our future workforce with graduates from that source. But with the scale of economic and industrial expansion we expect to see over the coming years, it's unlikely we will meet our human resource needs without more partnerships among all of the players, including governments, academic institutions, students, and industry. We need to do all we can to make them happen.

I referred to the coast guard a moment ago, and the sad fact is it's not the only federal service being withdrawn from our region. I know we are going through a necessary period of expenditure and deficit reduction and perhaps there are many areas where federal services are in fact redundant or just plain unnecessary. But Fort McMurray is on the move. It makes absolutely no sense at all that as our needs grow, services are withdrawn. Environment Canada, for example, closed its office not long ago, a move completely inconsistent with our need and desire to build meaningful partnerships and support sustainable development in our region. Furthermore, Human Resources Development Canada has moved the majority of services for our unemployed south. All claims, for example, are now processed in Edmonton. What kind of a huge inconvenience is that for those who are affected?

These are just a few of the examples. Overall, the federal presence and role in our city are on the decline. There are no substitutes for the kinds of vital services and activities being taken away from us. Just as a single road sometimes makes us feel like a neglected backwater, a diminished federal presence and a lack of service seriously hinder our prospects for growth.

Finally, I want to address another issue the committee touched on in its work plan, the tendency of rural communities to rely almost solely on natural resources and so subject themselves to the ups and downs of economic forces over which they have little or no control. We would all like more certainty and more stability. In pursuit of that goal Fort McMurray is working towards identifying opportunities to grow beyond the oil sands, and we've already achieved some promising success in forestry and in services to the oil and gas industry. But as much as we sometimes don't like to admit it, we're still largely dependent on a single industry or resource, petroleum.

It's not government's job to pick the winners and losers, nor is it appropriate to throw money in the form of loans and grants at projects that should be able to succeed on the basis of their own economics. For example, the oil sands, which have proven viable, will grow from a foundation of private financing and a regulatory environment that promotes rather than inhibits development.

In lieu of financial assistance, your committee has noted a number of legitimate roles government can play to help support business and community development - investments in infrastructure, research and development, and education among them. I'd like to suggest another. It's a partnership to explore potential value-added opportunities arising out of the natural resource sector. I think it would enhance our efforts to diversify local economies and lessen our exposure to boom and bust cycles.

To recap what I've said, Fort McMurray is not in need of economic renewal. We are home to a world-class industry, an industry on the verge of massive expansion the positive impacts of which will be felt across this country for years to come. We plan to grow from a position of strength and look to the federal government to help us overcome the constraints to that growth, the impediments that stand in the way of opportunities extending far beyond our own municipal boundaries.

As one of the main levers of development in Fort McMurray, as a key condition of our future prosperity, we need a more sophisticated and modern transportation system, from road to rail to river, a system that will better meet not only our present requirements but the increase in demands in the future. Today's infrastructure is either inadequate or in danger of neglect and decay. We jeopardize opportunity here and across Canada if we fail to address this key issue.

We need to work together to create a well-educated, highly skilled workforce, to re-examine the federal presence and role in our city from coast guard to environmental services, and to create partnerships among all players to promote diversification and so help ensure a prosperous future. Appropriate action in these areas will help Fort McMurray grow.

Thank you.

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The Chairman: I would like to call on Mr. Asselin for questions.

[Translation]

Mr. Asselin: Thank you. As you and the people who are here with you know, the Standing Committee on Natural Resources has decided to spend a week in the Northwest Territories. Yesterday we were in Yellowknife and today we are in Fort McMurray to consult with you and to hear your concerns.

This morning, I would like to know whether the Chamber of Commerce is satisfied with the present government's policy and with the promises it outlined in its red book with respect to rural development. Do you feel that the present government really is concerned about rural development and that it is encouraging businesses to grow and to train workers, so that your region will remain competitive, that it will be able to maintain employment and continue to develop this very important industry?

[English]

Ms Wood: What you're asking is whether we are satisfied with government as it's running our community today. I think there is always room for improvement in any government.

The private sector is certainly doing its part to encourage partnerships with educational facilities. They have the industrial centre here. There are co-op programs offered through Syncrude and Suncor.

The government should probably take a more active role with regard to education of our youth, not only aboriginal youth but our youth in this.... We need to let our youth know how important their future is in Fort McMurray, because they are our future. Without the educational backbone this community wants to bring skilled labour into the workforce....

I don't know how well-versed you are on Syncrude and Suncor, but they're based mainly on tradespeople. That's what keeps Syncrude and Suncor running. The journeymen are now in their forties and fifties and are looking towards retirement. We need to create an environment for our youth so that they can continue with the opportunity. Whether we get that through the government, which I presume you would do through the education system.... I think our education system needs to be a bit revamped to get these kids....

As I say, Syncrude and Suncor are doing their part in creating this co-op program, but the government needs to play a more active role in letting these children know what opportunities are out there for them. They don't have to look down the road. They don't have to leave this community because their future is right here, at Syncrude and Suncor and in the forestry, gas and mining they're trying to develop now. If we could get a little more support from the government in education, I think this community would certainly thrive because of it.

[Translation]

Mr. Asselin: Is the fact that young people are leaving the region simply a matter of education? The area seems prosperous as far as permanent jobs are concerned. If more and more young people are leaving, is it really because of education? Young people move to larger urban areas and never come back.

[English]

Ms Wood: Yes, in a way it does. Fort McMurray was on a flat line for a long time. We had opportunities brought to the forefront through government initiatives, one back in 1979 with Alsands. We were getting geared up for that and our youth were getting geared up, but they took it away from us. Another one came up in the early 1980s with OSLO. The government was very much in tune with this and it was going to happen, and then all of a sudden they took it away from us. There was nothing for the youth to look forward to, so they had to look at outside venues.

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Now, with the announcement that was made back in June, I was telling one of your committee members here I have never seen Fort McMurray as active and as alive as it has been in the past three months. It's all private sector driven, and I think that's good. It's good for the community.

Our youth can see that. They see there is an opportunity there for them to look towards the future in Fort McMurray rather than down the road.

Our problem with our youth today is not only with the trades but with our professional services: lawyers, doctors, dentists. We need those people here. We're sadly lacking in that area. Our youth have to go out of the city to get that kind of education. They can do a transfer course at Keyano College, but they don't have the facilities available to them here in Fort McMurray to do that kind of training.

When they are out there, they are exposed to the outside world, and maybe they feel there's more to life than Fort McMurray; and there is, granted. But this is a good community to grow up in. It's a good place to bring up your children and it's a good place for our children to bring up their children. If we could offer that through the education system here, give our kids something to look forward to, that's where we're going to get our population growth and keep our youth in this community.

Mr. Tim Walsh (Director, Fort McMurray Chamber of Commerce): One of the things you asked is whether we in rural Canada sometimes feel neglected by the federal government. I guess rural people do feel that way at times.

One of the things talked about today is the barging issue and the marking of the river. For us that is a very important issue.

To put things in perspective, I was at a conference in Quebec City several weeks ago, a real estate conference. We were the second group in a brand-new congress centre, one that was very beautiful. I understand the federal government helped fund that centre, and I thought how appropriate it was, because Quebec City is such a wonderful place to have conferences. I was thinking back to our region. Of course one of the things you've talked about today is the need to diversify. Well, tourism is something we're really trying to develop in this region.

They talk about dredging the river, but the coast guard also marks the river. If the markers are not out there you can't use the river. What we're talking about is having the federal government withdraw both the coast guard and the dredging service. We have 40,000 people in the region, and we certainly can't afford to pick up the cost of that service, but it's a very important service, so it's a service we think the federal government should be involved in.

When we feel neglected, that's the way we feel neglected. We think sometimes you don't realize the importance of some of these issues to us in the north.

Mr. Chatters: As you said in your presentation, of course, I think you're right that we don't have a lot to learn here about helping the community with economic development, because clearly this part of Alberta, this part of Canada, is pretty successful and vibrant and alive. But we're also looking at communities that are just beginning to look at major resource development - Voisey Bay and BHP Diamonds - and also communities that are in serious economic decline because the resource is running out or they are closing down.

I think the purpose of coming here to Fort McMurray is to look at some of the lessons we might learn about the things we're doing right and the things we could do better in those other communities. That relates to the impact on aboriginal communities, for example, aboriginal people, and whether it really can be feasible to maintain a traditional lifestyle in the centre of an area where the average income is $60,000 per year and you have the Internet and satellite TVs and those kinds of things...how the two relate, or the danger of relying on one industry. Those are the things I think we need to learn from Fort McMurray; what we're doing in this community to partner in providing basic education to people to create the opportunities for them within the industry, opportunities that aren't there because the education standard isn't there, and to provide the trades training, as you mentioned. Those are the important things we have to learn from Fort McMurray, and I think that is why we need to be here to do that.

Ms Carolyn Baikie (Executive Director, Fort McMurray Chamber of Commerce): I'd like to add to that comment, Mr. Chatters.

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You've listened to industry today, to Syncrude and Suncor. From the chamber's perspective, I know that we've certainly made great strides. We have actually developed a model of the powerful things that can happen when industry and business begin working together. That certainly has occurred in this region.

Over the last six to eight months, industry began working with our native business organization, the construction association and the chamber of commerce to develop some communication linkages and some strategies together. I don't know of many other places where you can find this partnering, this working together.

Once again, I think this area is definitely unique in its ability and in the strides we've made in working together with industry, and it's certainly unique in business organizations coming together. Traditionally they were a little apprehensive about sitting at the same table for fear of losing some of their autonomy, of having their mandate shaken. But that is certainly not the case in this region. In that area, we have a lot to be proud of as well.

The Chairman: Thank you. Ben's first.

Mr. Serré: Thank you, Mr. Chairman.

In your brief, you mentioned that one of the legitimate roles government can play in developing rural economies is to develop a partnership and, in your words, ``to explore potential value-added opportunities arising out of natural resource sectors''. I've heard that many times during the last couple of years, but when it comes to specifics people are at a loss. Could you be a little more specific? What kind of partnership do you envision? Can you give me some specific examples of value-added products that could be developed through those partnerships?

Ms Baikie: Yes. I think for the resources that are found in this region in all sectors, be it petroleum, gas, forestry, research and development plays a major role. I know that industry also has a role to play. But in rural communities like ours we need assistance from all levels of government. We're addressing you from the federal government today. I think when all levels come together to actually look at what kinds of value-added opportunities exist, they will find very little manufacturing in this area.

I think there are opportunities arising from industry. There are opportunities for manufacturing from the tailings. Sitting at the table and looking at some research and development to identify those opportunities would go a long way towards sustainable development and towards getting away from the concept of a one-industry town. We are a one-industry town, but there is also need for diversification. Exploring those avenues is extremely important.

The Chairman: Two other people want to ask questions. Bob, first, then Reg.

Mr. Wood: I want to carry on with what my colleague was just saying. Ms Wood or Ms Baikie or Mr. Walsh, in your opinion, are the skills of local workers and entrepreneurs of a quality sufficient to allow for a large-scale shift to higher-value opportunities in this area?

Mr. Walsh: One of the things we're very concerned about is that we know we're going to have a lot of opportunities in the future. And I think Fort McMurray has the same problem as everyone has all across the country: we have a lot of youth who don't know what they're going to do. We think we do have those opportunities that are going to come for youth. We just want to make sure the education is provided here to make sure they can take advantage of those skills. That's a real challenge, especially in the trades area. Trades traditionally have an apprenticeship, and of course the problem today is that a lot of those apprenticeships aren't available. They won't be available for several years down the road.

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Our experience when Syncrude came was that we had to import many tradespeople, because all of a sudden there was a need for them. We're trying to develop innovative ways to meet the challenge of training our youth in trades areas so that they can take advantage of those high-skill jobs when they come.

Mr. Wood: I just have one more question, Mr. Chairman.

I just wonder if the chamber has any opinion about governments. In your opinion, should the governments be in the business of providing direct or maybe tax-driven investment incentives for value-added processing?

Mr. Walsh: No, I don't think so. I think the government could hopefully participate with research and development dollars to help identify some of those things. In the oil sands industry, there certainly is a lot of research and development done at Edmonton, and I think they are identifying opportunities. Basically, in terms of oil sands direction, there are many by-products that possibly can be commercially viable. I think research and development will help identify those; as they're identified, people will take advantage of them. But I don't think a supply of direct federal dollars is the answer.

Mr. Wood: How can the government encourage natural resource-based companies to reinvest in local communities, or can we?

Mr. Walsh: I think you did that with the oil sands task force. I think the fiscal regime certainly helped. As Katie identified in her speech, I think you've just done a great job as far as that goes.

Mr. Wood: Thank you.

The Chairman: Mr. Bélair.

Mr. Bélair: Thank you, Mr. Chairman. My intervention would be much more of a comment and a suggestion than it is a question.

Witness after witness has alluded to the fact that education seems to be a perennial problem, as much here as it is in Yellowknife, as we heard yesterday. I just wanted to make you aware - and I think it's somewhat very sad, Mr. Walsh, that you missed the opportunity to visit it - of a unique education centre about a hundred miles from Quebec City, in the Beauce area. From what we've heard here this morning, I think this unique concept could easily apply to what you want to do.

I see that in their presentation this morning Syncrude indicated that they reinvest some 5% to 7% of their payroll into education. That is between $13 million and $19 million a year. That's a huge amount of money by anyone's standard when you're talking about job development, creation and training.

If you're willing, I could make the contact for you and send you some information to look at. Given the tremendous rate of success, there are even people from the United States coming to this centre now. The demand exceeds the number of places, the number of students they can acquire part-time on a job, part-time at work. I think this would respond exactly to what you're looking for.

So, Ms Wood, if you're willing to leave me your business card, I could get you in touch with the local member of Parliament and you could take it from there. But I think it would be worth for you people to invest maybe $5,000 or $6,000 and to visit the centre. I think it's the answer to all of your questions.

Thank you.

The Chairman: Thank you.

Mrs. Cowling, you have the last question.

Mrs. Cowling: Thank you, Mr. Chairman.

My question is with respect to education and training. I just want to indicate that Minister McLellan, who is really probably the person who has made rural economic development a priority in her portfolio, is a champion of sustainable development.

The whole area of science and technology has advanced so quickly. I'm wondering if you have access to the community access programs here. What about the information highway? We hear of the young surfing the net. I'm wondering if you could expand on your thoughts with respect to the technology end of it, and with respect to how rapidly and how quickly we are moving. Where are you here in this area with the information highway?

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Ms Wood: There is probably a computer in one out of every two homes in Fort McMurray. We're doing a lot of work with our cable company here in town, which is putting in a two-way cable plant system. This will afford us Internet services over the cable rather than the phone system. We have a very good phone system in place, but the cable system will probably be ten times faster than the phone system. They hope to get out to the plants and offer them Internet. So we're very sophisticated in our infrastructure for communication and the information highway.

I can't remember the first part of your question. You had asked something else. Do we have the infrastructure in place here?

Mrs. Cowling: That's right. My question was whether you have the infrastructure in place and are using that infrastructure.

Ms Wood: I would have to say yes, very much so.

Mrs. Cowling: Is it well received?

Ms Wood: The Internet?

Mrs. Cowling: Yes.

Ms Wood: Most definitely. One thing about Fort McMurray - I think we may have misled you with regard to skilled labour in this community. We have very highly skilled, highly educated people in this community. Not only do Syncrude and Suncor use a lot of technical trades, but they use an awful lot of professional trades such as engineers. Their workforce is based on engineers. So we have very highly educated players in this community who most definitely communicate through the Internet. It is very well received and will continue to be in the future.

Mr. Walsh: I'd also like to mention that education is a huge priority. As Syncrude and Suncor mentioned, they are very involved in industry partnerships. As a matter of fact, Keyano College has received national and international awards for industry-college partnerships. So looking for innovative solutions is something we're very interested in, and your offer is great. We will follow up on it. Thank you very much.

The Chairman: Thank you for your presentation. The members were quite interested and there were a number of questions. We look forward to having an opportunity to get back to you with our report and recommendations.

I call upon our next witness, from the Mikisew Cree First Nation, Lawrence Courtoreille. Let me begin with our apologies. We had some communication difficulties in letting Lawrence know about the time and everything. We appreciate that you've made the time and are down here to make a presentation. Thank you very much.

Mr. Lawrence Courtoreille (Chief Executive Officer, Mikisew Cree First Nation): I'd like to apologize for not being prepared, and there's a reason behind that. I was on my way to Saskatoon and I ran into the mayor. He said, ``Oh, you're on the agenda this morning.'' I said, ``Really?''

Anyway, I'd like to thank our member of Parliament, David Chatters, for informing us of the standing committee being available. We responded to his request that we were interested, and that was it. We never heard from anybody else after that. But I welcome the opportunity. I wouldn't give up an opportunity like this to give some of our views from the first nations perspective.

As background, first of all I want to tell you that I am currently the chief executive officer for Mikisew Cree First Nation, and I'm also a member of council for the municipality of Wood Buffalo.

The discussions that I had an opportunity to hear about and briefly discuss with the mayor fall in line with some of the concerns that we as first nations have. Unfortunately, as I say, I don't have a written presentation, but I will provide you with one we provided to the oil sands task force before Mr. Martin announced his budget last year regarding the new tax regime, regarding the oil sands development.

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The reason I have no problem in doing the verbal presentation is because for many years we have been quite versed in trying to have some input and informing people of the concerns of the aboriginal people in this region.

We, the aboriginal people, have at times been accused of being anti-development, but the reality is that we're not against economic development or the betterment of a community or region. What we have been particularly concerned about, and we've made our views known...and unfortunately our concern for the environment has been attributed as being against development.

But the reality is that for many years in this region we have been giving our concerns to the federal government particularly, because, as you know, we the first nations have a direct relationship with the federal government. We have been concerned particularly about the lack of development in the communities. As you know, in Alberta, although there is the heritage trust fund that has been developed out of the oil sands and the gas development in this province, none of the first nations were able to access that particular heritage trust fund. That would go into the development of the communities.

Also, with regard to the infrastructure program that the Liberal government announced, the first nations were not able to access that program. There's nothing to match the program with the federal government, because we are strictly resourced through the federal relationship through Indian Affairs.

We believe we can support and participate in development, but also I think the most important thing we look at, and we've been looking at very seriously, is that we want to continue living in the communities in which we live, which surround Fort McMurray, but we also want to see our communities developed as we've been able to watch, from the outside, this community build over the last 30 or 40 years from a small town into the large city it is today.

We've watched for a long time, and we've become quite amazed at how fast a community can be developed. But to sit as one of the communities that surround the oil sands development, 12 kilometres away from the Syncrude plant.... We were finally able to get water and sewer services in the last number of years - basic water and sewer services to a small aboriginal community that is 12 kilometres away from Syncrude. We're talking about the basic human services that any human being in this country should have, especially 12 kilometres away from a major resource development.

I guess we were caught between the two government levels, as we have been in the past. The province says we're a federal responsibility, and the federal government is saying, well, you know, the taxes are being collected from the region and it should go back into the communities.

But fortunately a lot of the support has come from the industry. Industry is asking the very question: I pay you guys $8 million a year in taxes; what are you doing for the communities outside Syncrude, for the communities in this region?

That is a very fundamental question that we asked Mr. Martin and the committee that was established between departments in reviewing the oil sands development. This time around we don't want to be in the same situation we were in over the last three years; we are able to be up front now.

.1335

Unfortunately, with the announcement of the oil sands development, some of our concerns again were not addressed. Those concerns were very clearly identified by the five communities.

We don't expect Indian Affairs, with their small budget in the region, to be able suddenly to access dollars to the communities in this region to upgrade the housing and community conditions, realizing that what they'd be doing is taking away other first nations' limited funds for their development.

What we proposed and still propose is that the federal government set aside a set of funds, through this new tax regime and through the regime and agreements they've made with the oil sands industry, to respond not only in the creation of employment but also in the creation of new dollars to build the communities in this region so that they can more helpfully approach and participate in the economic growth in this region.

I don't think we're asking for too much. We're asking basically, as the original people who have inhabited this area for many years, to benefit from the development.

Again, we as first nations are not accessible to heritage trust funds or any of the coffers the province has, because we are a federal responsibility. On the other hand, the federal government has not done anything in terms of providing the first nations with the infrastructure to allow their people to live comfortably enough to participate in the economic growth in their region, so we are still in that position.

We've done numerous studies for the last number of years, since the 1980s, to try to improve the living conditions of aboriginal communities outside of Fort McMurray. That's still going to be our goal.

Regarding employment and training, we've gone a long way in the last 10 to 15 years. We've seen a major improvement. Some of our communities are starting to benefit from the oil sands development, but a lot of that had to do with the first nations themselves. If you look at the record of the first nations that are successful in the industry, they are the first nations that have been able to address and provide some of the infrastructure needs in their communities.

But we still have a long way to go, as you've heard previously from the chamber of commerce. We still have to address and still have to do a major catch-up in the area of training and employment.

But we as first nations are facing a new challenge, the offloading of federal responsibilities over to the province. In two years the training and employment program of HRD, Human Resources Development, will be the responsibility of the Province of Alberta. Where does that leave the first nations, where we have a direct relationship with the federal government?

We know the track record of this provincial government in the cutbacks of education and training. If suddenly we don't mean anything in the provincial benefits of resource development of this region - that hasn't come to us directly as first nations from the province - then how do we expect anything is going to change for first nations now that the federal government is going to turn over the responsibility of training and employment to the province?

That is a very neglectful move on the federal part. We have a direct relationship with the federal government, and we're starting to see this government offload a lot of the major responsibilities onto the province without consultation with first nations. Employment training is just one of the first ones we can clearly identify.

I know the previous minister, Mr. Young, has already met with the provinces to start the process. Why I know this is because I personally supported and developed the new human resources development criteria for the Liberal government on the Pathways restructuring. But it was never part of our recommendations to offload that responsibility.

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The other issue we addressed in that document is that because of more employment being provided, we are able to now address some of the business development. Again, that is being addressed primarily by the first nations that have been able to access some improvements in their community infrastructure. They're able to now look even further than employment and start addressing business development. This particular first nation has been quite successful in building a development in the region and being a business partner in the region, in both employment and business. The one area that is totally empty yet is the training aspect.

Although we have businesses, a lot of the businesses are directed to labour-intensive contracts. We've been able to provide employment, but on the skilled labour side, there's a very strong lack of training capabilities. Not all our communities can access or move to Fort McMurray to do the Keyano training.

I know the Liberal government in their red book talk about TOJ. As Mr. Chatters knows - I ran against him as a Liberal candidate in the last federal election, and we talked about TOJ - I hope to see this happen very soon, because we would definitely like to utilize that particular program. But I think we're moving ahead.

We've missed out on opportunities as first nations because a lot of the programs that happened over the last 15 years, such as CAEDS, and a lot of the business opportunities, such as the oil sands equity development fund, have all gone. They were built on the backs of the first nations here when the previous Syncrude agreement was established. At that time, the majority of first nations in this region were not capable of entering into major development or business or of addressing infrastructure programs. Now that we've been able to address those, we want to get into business, and there are no programs available to access.

That brings me to the last point we talked about. As an individual who's been involved in the scene for a long time, particularly in the aboriginal scene as the vice-chief of AFN for a number of years and as chief of my own tribe, I know one of the things we are looking at and that we proposed to the federal government - and it still could be a reality - is that we as first nations don't want any more handouts.

The easiest thing we can access is probably welfare dollars, but what we propose, as we did in our letter, is equity participation. We're talking about oil sands development over the next 25 to 30 years. We said with all the moneys they spent on us, isn't it possible that first nations somehow would be able to raise their own equity dollars, with the assistance of the federal government, and buy 5% or 10% of some of the development? This way we can ensure that we will be able to earn our own dollars and put those dollars back into our communities. It's still a possibility, and it's something we haven't given up on.

Those are the main points I wanted to make. We are prepared now to be a partner. We are prepared also to address the needs in our communities. But we need some assurance from the federal government that our interests are going to be looked after, the ones you are federally responsible for, because we're going to need help to become full partners.

There is a possibility in this particular region - we have only five small communities - that of any record you're going to prove in your training, employment and business programs, and maybe a possibility of our equity participation, this is the area where you can be successful.

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So with that, I'd like to apologize again for having an unprepared document. What I would do is provide the documents we presented - we lobbied hard for the whole winter to have our concerns in Mr. Martin's announcement on the oil sands new regime - and other than that, we're always prepared to sit down. I am rushing because we just found out today that the Minister of Indian Affairs will be coming here on November 17, 1996. So we will be making our views known again.

As a committee, I think you have to be well aware of some of the situations we are in when it comes to not accessing and not benefiting from the oil sands development. Look right across northern Canada. All the developments right across the country, whether they are in gold, oil, timber, water, potash or uranium, are from the north. The majority of first nations across Canada are in the north. Our lands and resources are making people who are 100 miles north of the American border, where the majority of Canadians live, very comfortable. Their being comfortable is on the backs of the resources of aboriginal lands, mostly in northern Canada. We want to benefit. It's time we participated and benefited.

Thank you.

The Chairman: Thank you very much, Mr. Courtoreille. As for tabling your documentation, we stand prepared to receive this at any time.

I'd ask Mr. Asselin for questions.

[Translation]

Mr. Asselin: Thank you, Mr. Courtoreille. Yesterday, in Yellowknife, I asked a witness the following question. What should we do to help small businesses? What should the federal government do to help small businesses and industry to create more permanent jobs?

The witness answered that, first of all, there is a certain degree of political instability. I was happy to learn that Quebec is not the only place where there is instability. That sort of thing is also happening at the other end of Canada.

He told us that this unstable political climate was putting investors off, thereby causing the loss of jobs and endangering sustainable development. One of their principle concerns is the setting of territorial boundaries. It seems that the federal government attempted to set territorial boundaries more than a quarter of a century ago. In 1996, what is your community doing to help the federal government solve the territorial boundary issue so as to reassure investors and encourage them to open up businesses in the Northwest Territories and, by doing that, creating permanent jobs?

[English]

Mr. Courtoreille: I guess my first response to you would be that I assume the person who answered was a non-aboriginal.

[Translation]

Mr. Asselin: That is correct.

[English]

Mr. Courtoreille: We don't have this particular problem here. We do have some outstanding issues with the federal government, particularly on treaty rights and economic benefits. We also have some land claim issues. But those, in my view, have not disrupted development in this region. The development will continue even if the Québécois or the Reform Party get into power tomorrow. Oil sands will continue to flow, benefits will still be going to the south, and you might get a new NEP, but the reality is that the work will continue. People will profit in this region.

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So I don't think aboriginal people in this particular region cause instability, not in this particular region. A lot of the improvements in this region have come through a lot of understanding between some of the major developers and aboriginal people. If you look at some of the issues we've been able to address in the last number of years, a lot of it has been with the leadership of the oil sands development participants, Syncrude and Suncor, and more particularly with Syncrude, because they are more aware that their relationship with the first nations is of major importance.

That's not to say land claims are not a major issue. They are still an outstanding issue. We do understand that despite who gets in - and I think Dave has heard me mention this a few times, it doesn't matter who gets in - we still have to deal with the justice department, people who have been there since probably Diefenbaker's time and still have the view of blocking everything that comes through in land claims or other issues. That's still going to be an issue. But we're hoping to resolve those in the future.

It does take in issues of areas that are currently being developed. Some of the instability we find in this region results from a lack of direction from the federal government on how aboriginal people are going to participate in oil sands development. We've made numerous requests and we've made numerous presentations, and we will continue to do that.

About small business, we are still addressing many of the issues of infrastructure in our communities. As Dave, our MP, knows, a lot of the communities have continually made known the housing conditions in the majority of the communities here. Mikisew was fortunate to have a settlement of our land claims in 1986. We've been able to utilize the funds we received through settlement to help us get to where we are today. But unfortunately a lot of the other first nations still have to deal with a lot of the issues of community infrastructure.

Maybe we're unfortunate in not having a major agreement as they do in James Bay, in your part of the country, but I'm sure the James Bay people still feel the same issues we do, about who controls the development in their particular region, whether it's the Quebec government or it's the James Bay people. Those issues will always affect all first nations, because if you look at our treaties, we talk about resource sharing and we talk about sharing the wealth in this country, including in Quebec. We haven't seen that yet, but we hope we're moving toward that.

The Chairman: Mr. Chatters.

Mr. Chatters: I don't know quite where to start, because of course Lawrence and I have known each other for some time and we've had these debates before. I argue with Lawrence about whether or not aboriginal communities are sharing and benefiting in resource development. I've been in most of the aboriginal communities in the constituency and they have infrastructure facilities that make many of my communities in the south quite envious, yet we continue to have a drop-out rate in excess of 80% from those educational facilities, for example. I think that's part of the roadblock to fuller participation by aboriginal people in resource development, and that's a problem we still have to solve in spite of the infrastructure being there.

I'd be interested in knowing your views in that particular area, because I don't think we can ever resolve the debate on direct equity ownership and the recognition of a third order of government in Canada. That's a broader debate that goes on and will continue to go on, but the immediate problem is this lack of education and how we can address that.

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Mr. Courtoreille: I think the best way to answer that is that we have been controlled by Indian agents the majority of our life. The Indian Affairs agent left this region probably less than 20 years ago. Whether it was the prevailing attitude of the government at the time or generally of non-aboriginal people across the country of how Indians should be dealt with, we were wards of government. As a result of going through that process, whether we were taken away from our homes and put into residential schools or whether we were always run by an Indian Affairs agent, the reality is we've been able only in the last 15 or 20 years to start developing some form of self-sufficiency and some form of a government in our communities to start addressing the issues.

One of the very first issues we addressed was trying to stay where we are and trying to get away from this idea that we had to leave our communities and move to Fort McMurray, because there were a number of comments back in the late 1960s that.... An example was Fort McKay: ``Why don't you just bulldoze the town of For McKay and move all the aboriginal people here to Fort McMurray? Then we won't have to worry about infrastructure programs.''

Dealing with that attitude, and being a part of a system where the first nations people never had any say in terms of their own destiny, in terms of where they were going to go as a people, when we started building our own administration and developing our own governments over the last 15 years, we were, and still are, addressing a lot of those problems. We're still trying to find out how we're going to run our government systems. We're still, in a way, not able to control our own education. We're still not able to control our own health destinies, although in Fort Chipewyan we are currently negotiating a transfer of health authority; the other three first nations don't have that capability.

We are still in the process of trying to resolve the results of the Indian school system, of alcoholism, of drug abuse, of family violence. We haven't been able to be given the resources to address those particular problems, which were created by a legislation and a policy that was brought to us not by Ottawa but by Canada. They believed that the answer for aboriginal people was this way. Well, that policy failed, and as a result we are stuck with the consequences of a policy that failed. Those consequences are those very issues you've talked about, Dave - educational concerns.

I just had a meeting last night with our community, talking about how we're going to deal with the issues of drop-outs and deal with the kids and the parents and the concerns of drop-outs and also the discipline problems. It goes right back to their parents, because their parents are the direct descendants of the residential school system. I am one of those parents.

When you talk about those particular issues, it addresses employment. It addresses education. It addresses the upkeep of your home, and the family structure, and the community.

Over the last number of years we have made presentations to various government agencies: Give us the resources to address our problems and our communities. Don't give us dollars to build a detox centre; give us the dollars to prevent people from going to a detox centre. Give us the resources to properly address our educational needs. Rather than trying to find a way to offload that responsibility onto the province, why don't you live up to your treaty obligations, where they say you're going to provide education as a treaty right?

I think a lot of that, Dave, is that we're talking about a community that over the last 15 or 20 years has finally started to stand on its two feet. It's a tough situation, because we're trying to keep up with what's happening outside our communities as well as trying to address the problems that arise from our communities. Not all of it is the responsibility of someone else. A lot of it is our own, too, and we're the only people who are going to resolve the problem. But unless we're given the resources like the healing centres and unless we have the resources to start addressing the problems in our communities with our youth, with the family structures, etc., we're never going to be full participants in this country.

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The Chairman: Mrs. Cowling.

Mrs. Cowling: Thank you, Mr. Chairman.

I want to thank you for your presentation. This committee is very sensitive to the issues of the first nations people. I have fourteen first nations communities in my riding. One of the things happening there is the head start program initiated by the federal government for 3-year-olds to 5-year-olds, which is building healthy young people and parents. Are you involved in that program?

I would also like you to respond to this question. You do have a unique culture and some traditions that you may well want to enhance and build on, and you indicated that you were not involved in the infrastructure program. What should our government be doing to help you build on the strengths of your community so that it is a vibrant and healthy community with respect to infrastructure and preserving your traditional cultural background?

Mr. Courtoreille: The best way to answer that would be from my own community's perspective and my own views. My wife is an instructor at the head start program. Also as a council member with the Wood Buffalo municipality...we are able to assist the head start program. It's a start.

There's no doubt you will find volumes of studies and volumes of presentations made by first nations, not only to the federal government but to the AERCB hearings about possible solutions to address the community infrastructure.

I don't want to say that the first thing we need from any form of government is recognition as a third level of government, as Dave said. Just recognize the fact that we are here and that we have unique rights. They should respect who we are, where we're coming from, and where we live, and I will particularly address that for the community of Fort Chipewyan.

This will show you the total disregard of community and region. Sometimes we talk about Lake Athabasca and the delta - one of the largest deltas in the world - probably being the sewer of most of the river systems. We have the Athabasca River and the Peace River, and I think we're talking about seventeen to eighteen pulp mills on those rivers that flow into Lake Athabasca.

We're talking about a dam being built in B.C. in the 1960s with total disregard for the economic conditions of people in that region. People in those regions were very self-sustaining people who lived off the land from fishing and trapping. For many years we've asked for assistance from the federal government to find a way to make B.C. pay for the damage that they've done to the Peace-Athabasca Delta.

There have been - and the government will know - millions of dollars spent on studies, whether it's a northern river basin study or the Peace-Athabasca Delta study. There has been study after study on how we're going to revitalize this unique area in the world, because Wood Buffalo National Park is a world recognition area, a preserved area. In fact, sad to say, that is part of the delta, which has become a sewer area for the dumping of all of the sewer systems in our area.

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So we're still not at that level. We're still not at the level where government will come to us and ask about things that the community, even though we've talked about it...whether it be tourism.... Tourism has become an area of economic opportunity in this country. We come from an area you have to fly for an hour and a half to get to, and drive on the winter road for four hours. Otherwise you have to go by river to get to Fort Chipewyan.

We have an opportunity for tourism, yet we still have a provincial government that is not even able to sit down with the first nations and talk about how we can participate. They're looking at how they can set up green zones and safe-area zones, and 2,000 whatever they call them...safe, special places. This is without looking at the people who live in the region. Someone out there has decided that this area is a nice place, so we should preserve the whole area, without looking at how aboriginal people live in that area and whether they should participate in determining what's best for them.

There's only one thing that will make us economically viable in that region, and that's tourism. As a first nation, we have been approaching the federal government and we are hopefully going to announce within a couple of weeks a self-government negotiation process. Why? We want to take control of Wood Buffalo National Park. That is our area. We want to be able to continue to manage that territory, and we have wanted to be the major player in that region, whether it's running Wood Buffalo or having an opportunity to create tourism in that region. So that's one way we see it.

The Chairman: Thank you very much for taking the time to provide your testimony. You certainly provide a unique perspective to us. I know you're off to Saskatchewan, so we appreciate that you were able to be here today to give us your testimony. We look forward to any documentation you want to table with us.

I would like to call on our next witness, from the University of Alberta, Edward Chambers.

Dr. Edward J. Chambers (University of Alberta): Thank you very much for the opportunity to appear before the committee. I have provided you with a statement. I would like to run through some of the matters and leave some time for questions.

I'm the director of two interdisciplinary research centres at the University of Alberta, supported by the Department of Rural Economy, the Department of Economics and the Faculty of Business. I am also a professor of business and former dean of the Faculty of Business.

These centres are small. We view them as agents through which the expertise of staff and graduate students is brought to bear on specific problems in which there is a public interest. These are the Centre for International Business Studies and the Western Centre for Economic Research. We are a member of the Canadian Rural Restructuring Foundation.

The presentation I have today is much more concerned with the general issue of rural development, though I will refer very briefly in my remarks to Fort McMurray, about which you've heard a great deal this morning.

I wanted to address three questions in this submission, some of which I'm sure you've encountered in your Ottawa hearings. The three questions I want to talk about are, first, the need for differentiation in policies that emerge as far as rural communities and rural development are concerned. The second matter is to refer to natural-resource-based rural communities. The third is to consider the potential impact of communications technology and lifestyle choices on rural communities.

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With respect to the first matter of differentiation in rural communities, one of the things I've emphasized in the document is that I certainly hope in your final report you emphasize as much as anything else the fact that there is no one rural Canada. Indeed, there is no one rural Alberta, there is no one rural British Columbia and there is no one rural New Brunswick.

The point is that just as there are regional differences in Canada, there are regional differences in each province. Whatever policies evolve, whether they're federal or provincial, they have to come to grips with that diversity.

In Alberta we have some rural communities that are languishing. You've heard about a rural community this morning that is certainly flourishing and experiencing strong growth, and there are many other rural communities in Alberta, such as Brooks, Grande Prairie, Camrose, Cochrane, Canmore and Medicine Hat, that are experiencing strong growth.

So revitalization may be the concern of some rural communities, but other rural communities right now in the province of Alberta and certainly in the province of British Columbia are struggling with policies and actions to deal with overly rapid growth and population in migration, all of which place heavy demands for infrastructure expansion and even threaten the communities' quality of life.

The community wants grassroots involvement of residents in developing a vision for each of these rural communities. How to pursue that vision is obviously a necessary condition to the application of any policy, but I would stress more than anything else that visioning and the development of objectives are necessary conditions as far as rural communities are concerned.

The fact of the matter is you have to combine visioning and the involvement of the community with objective reality. Hard, empirical evidence about where the community has been, where it is now, its strengths, its limitations, how it stands out and how it fares with regard to other rural communities goes hand in hand with visioning and the setting of strategic goals.

In Canada our understanding of regional diversity - and I'm not talking about differences between provinces; I'm talking about regions and sub-regions within provinces - is limited. It's handicapped by the absence of underlying consistent information and data about sub-provincial areas in the country. The absence of that data on a systematic basis has greatly inhibited applied research into the conditions of rural areas.

I regret to tell you - and I've made this statement in the submission - when I am asked to examine the problems of rural areas, it is much easier for me to examine them in the context of either the United States or Europe than it is in the case of Canada. That's a fact, and I'm sure other researchers, if you ask them the question, will tell you the same thing.

In the United States, for example, there are effectively 3,000 sub-areas or regions, politically bounded regions, and those are the counties. The statistical agencies of the Department of Labour and the Department of Commerce and their predecessor agencies have provided for more than 100 years systematic information on those counties. That data is available annually, and it permits an examination of the performance of rural counties, or combinations of rural counties. It enables one to stratify rural counties as those which are getting on well and those which are getting on poorly. It enables one to understand the economic base, the structure, the socio-economic profile of those regions.

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Of course what we need in Canada is the systematic provision of data and information about sub-regional areas in each province and across the country. I've made some other comments about the fact that until the announcement of a few days ago, we hope, in Canada the availability of that information has been out of all reason. That is to say, we can't really touch that information from Statistics Canada because of the cost-recovery policy imposed by the Treasury Board in acquiring it.

So recognizing that there are sub-regions within each province and recognizing the need, in dealing with rural areas, to combine hard empirical evidence with the visioning and with the community involvement and with the development of strategic plans is absolutely essential.

Let me say a word about natural-resource-based rural communities. In Canada, and indeed everywhere, the strength of a rural community depends essentially on the size and character of its export base. What I have to say will emphasize the importance of an export base to any rural community. In Alberta, for example, most of our $28 billion per year of merchandise exports from the province - that's what we'll export from the province this year - is of course energy based and agriculturally based, and those exports are effectively driven by what happens in rural areas.

The thing I would emphasize about natural-resource-based communities is of course the health and maintenance of the export base. The second thing I would emphasize, once again, is that there is no single model of a natural-resource-based community.

I think the community in which you're holding hearings today provides an extraordinarily successful prototype of a rural natural-resource-based community. It's a very interesting case, because of course the natural resource was here, but let's remember that this community has been so successful because certain other things have happened.

The first is that there has been the application of research and development expenditures to the natural resource base. All you have to do is look at the unit cost performance in producing a barrel of oil by Syncrude and Suncor today compared with what it was ten years ago. This is a concrete example of how applied research has maintained the cost-competitiveness of this community, the commitment of the operators in this community to continued research and development activity in collaboration with government-funded research agencies in the province of Alberta and in the country as a whole, and the proximity to the University of Alberta, which has been from the beginning a research leader in tar sands development. You're holding hearings in a community that is literally a world leader on a technological frontier as far as the development of tar sands are concerned.

The thing that has happened besides the application of research and development is the leadership that has been exercised in this community by the top management of the operators. I can't emphasize that more.

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So you have a very interesting combination of natural resources, the application of research and development expenditures, and the commitment of the top leadership of the operators to this community. That's what makes this a distinctive example and a sort of prototype model for any natural resources-based communities.

I'm not going to say very much about agriculture. I'm not an agricultural economist. It seems to me in western Canada agriculture is experiencing enormous transitions as a result of changing subsidy arrangements and the impact of rural trade agreements on this region. Securing that transition is certainly going to result in new priorities in agricultural research and development expenditures, and a thorough application of research and development to food distribution and marketing channels seems to me to be essential, beyond the normal agro- and biogenetic applications in research in this part of the world.

The third thing I want to talk about is the potential impact of communications technology and lifestyle choices on rural communities. Let me get into this in the following way. I think these changes do something very important for many rural communities. That is, they effectively expand the export base of those rural communities in a way that certainly in Canada hasn't been fully acknowledged and fully considered, though it surely has been in other parts of the world.

If you use a crude proxy such as employment, the fact of the matter is that in British Columbia and Alberta in the last ten years, if anything, the relative share of employment outside of the metropolitan areas - that is to say, outside of Vancouver, outside of Victoria, outside of Calgary, and outside of Edmonton - has actually increased. That doesn't look like an unhealthy rural society to me.

In Manitoba it's held its own. Only in Saskatchewan has it declined. But then of course there are places such as Humboldt in Saskatchewan.

What one then needs to look at and ask is why are these things happening? That is to say, what is actually taking place that would make the rural society in Alberta and British Columbia, certainly, seem viable, at least in many parts of those provinces? It seems to me two things are going on that we need to know an awful lot more about and we don't know very much about.

The first is the migratory patterns of older-age cohorts. This is something that's taking place. If you go to many rural communities in Alberta, it's right in front of your eyes. It has certainly been much discussed in British Columbia. These are issues that relate to lower capital costs of housing, lower property taxes, good access to larger centres, freedom from the complexities of living in metropolitan areas, and I think ever more so the impact of technology on the delivery of medical services.

What the influx of older persons does is bring to a community a source of income that is independent of what's taking place in the community, so fundamentally the export base, if you want, of a community is expanded by the inflow of older members of the population. Their income is not dependent on the circumstances and economic conditions that exist in the rural community.

It's also possible they may create demands for different kinds of goods, for fairly sophisticated kinds of goods and services. Additional infrastructure requirements go hand in hand with that, and the local rural community certainly has to accommodate that change. But there are very important questions about the composition and magnitude of the infrastructure requirements, the kind of employment that the presence of these individuals may generate, and how these older-age cohorts connect socially and economically with the community.

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But it's there. It's taking place in western Canada. It's all over British Columbia and it's all over Alberta. It has profound significance for rural communities because it produces a more stable source of income flow. It is also a potential resource to the community. At the same time, of course, it imposes resource demands on the local community in a major way.

The second thing that I think is important to understand is the rural migration of business service establishments. Why is that possible? It's possible because of the impact of new communications technology on the location of business service firms.

I'm sure you've heard and will hear in your hearings an awful lot about manufacturing activities and manufacturing industry, and there was some of that this morning as I sat and listened. But the action may be the fact that the new technology is making possible the movement of higher-order business service firms into small communities. I'm talking about computer and related services, accounting services, advertising services, architectural and engineering services - a whole range of what we understand as business services. That's the most rapidly expanding sector of the Canadian economy by any measure that you want to apply, and more and more, technology is making possible the placement of these business services in rural communities.

What is happening, then, is that the new communications technology, the use of the Internet and all the things that go along with it, is probably biased towards the location of business services in rural communities.

In the paper and in what I've presented -

The Chairman: Excuse me, either I have to ask you to wrap it up quickly or we'll have to waive the questions.

Dr. Chambers: I am going to wrap it up quickly.

What I'm saying is that one needs to understand what is taking place there. The implications for small communities are very major indeed, because those producers of business services are selling or exporting their products from those rural communities.

I don't think we know very much about these things, but this is taking place in British Columbia and Alberta, and it has profound implications for rural development.

The Chairman: Thank you.

Mr. Chatters.

Mr. Chatters: In view of the time constraints I'll waive, but I certainly agree with what he said.

Mr. Wood: I have one quick question. Do you envision a future in which many of the smaller communities will end up disappearing, to be replaced by viable regional centres?

Dr. Chambers: It's entirely possible. I think some small communities will disappear. Other small communities will do very well. There are all kinds of small communities in western Canada that are doing extremely well, and I think they reflect these very changes that are going on.

The Chairman: Thank you very much. Many of the themes you have brought forward,Mr. Chambers, build upon some of the testimony we heard in Ottawa, particularly your comments on what you've called the older cohorts as well as the business services. It adds to our study on a couple of issues that are going to play an important part in our eventual recommendations.

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So I do appreciate you taking the time. You've left us a very detailed brief, and I thank you for that as well.

Dr. Chambers: Thank you.

The Chairman: I'd now like to call upon our final witness for today. Mr. Price is from the agriculture, food and rural development section of the Government of Alberta. Welcome, and thank you for being patient.

Mr. Keith Price (Head, Rural Initiatives Branch, Department of Agriculture, Food and Rural Development, Government of Alberta): Thank you.

I was introduced at another meeting not very long ago as somebody who is a true western Canadian. They described a true western Canadian as someone who is born in Saskatchewan, makes their living in Alberta and retires in British Columbia. When you think about the tremendous drain that puts on Saskatchewan - raising and training people so they can leave to make a living somewhere else and retire yet somewhere else - I think it has something to say about development in rural Canada.

I want to talk to you a little bit about our definition of rural development, the philosophy that the Alberta government has about it, and the approach we want to take. We've defined rural development not as a program or something that you do, but rather as the outcome of an accumulation of individual efforts and group efforts that occur under certain conditions.

We have settled upon four conditions. We believe the community must have a common vision that is supported regionally, provincially and nationally in order for them to achieve it. We believe the government should provide a supportive economic, social and regulatory climate within which the development can occur. There should also be a balanced emphasis on social, economic and environmental priorities. Communities, government and the private sector must unite in their efforts.

I believe what we heard this morning in Fort McMurray has been happening in this community, but it's not happening in all communities. There are three critical areas on which we need to focus.

For economic prosperity, we believe we need an improved competitive position, and that would be in the world market. We have to build on the strength of our people, families and communities. We've heard, particularly today, about the need for education and skills training. We firmly believe this is an area in which people's strengths must be built.

But there's another area in which many of the communities are suffering: the lack of skilled local leadership.

We also, of course, need to be concerned about environmental preservation.

The outcome of our rural development efforts, we believe, is listed here: regulations that help to develop and use Alberta's natural strengths and advantages; practices and technologies to improve and preserve a healthy environment; the information and resources that are needed to enable local people to capitalize on their local assets and resources, which has been done so well here in Fort McMurray; skilled and motivated owners, employees and managers in the rural areas, and an infrastructure that supports that development; and access to affordable, high-quality education for all, which will result in what we want: strong and viable rural communities.

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In order to get there, we've set out what we think are the priority needs for rural development. We believe in Alberta that one of the prime things we need is the freedom to access world markets through various treaties, regulations and so forth that perhaps need to be adjusted.

We need a strong entrepreneurial mindset. When we talk about skills development for people, ones we consider paramount in young people is the development of entrepreneurial skills and an entrepreneurial mindset. We believe this is something that needs some special training and that it's not necessarily available by a teacher talking to them about it.

Indeed, some of the things we like are some of the programs such as I Want to be a Millionaire and Junior Achievement and some of the ones that put kids into a business at an early age and that are supported with additional education in the schools. We believe that entrepreneurs are not necessarily just born; entrepreneurs can be, and should be, developed.

We need to complete the infrastructure to provide full access to electronic information. It's particularly important in the rural areas to get information about opportunities.

Someone asked this question here today and at another recent meeting: how do we find out what the opportunities are? I believe that we in the government cannot do that. I believe the opportunities exist in the minds of the people who are going to implement them, which means the entrepreneurs. I believe that if we can provide entrepreneurs with access to the information, they will in turn discover the opportunities.

We need a competitive tax structure that encourages investment in business and job creation. One of the things I think we should be thinking about when we talk about rural business is that in most communities outside of Fort McMurray the businesses we speak of are small businesses. The definition of a small business for tax purposes, I believe, is capped at the $200,000 level. It has been at that level for a long time.

I believe that by changing that level, we can leave more money in the pockets of small business to be used for reinvestment purposes. I think this level needs to be examined in light of inflation over the last number of years. Even though inflation is not going strongly right now, this has been capped at that level for quite some time. A business of under $200,000 maybe should be called a very small business, not just a small business.

We need to have services to encourage people to live in the rural areas. There was some mention of that by other speakers as well. If we want to encourage the people to come to Fort McMurray to live in small communities that are even smaller than Fort McMurray, they must have the services there to support them.

On the way up here last night, I spoke to an orthodontist who practises two days a week in Fort McMurray. He is trying to find someone to take over his practice here full time. The practice has expanded beyond what he can service, but he cannot find any other orthodontist who is willing to come to Fort McMurray, because they don't feel the services here meet their needs.

What do we see as the role of government in all of this? We see two things. The government can assist the communities in developing their visions. As Ted Chambers said, perhaps it can make sure the vision is realistic. But the major role is to create the economic, regulatory and intellectual climate and provide the shared physical infrastructure within which the communities can proceed with their own development.

We feel that communities and small businesses are the ones that will drive the development. They are best capable of developing their own communities. It is the role of government to provide the appropriate infrastructure, particularly the policy and the regulatory climate, within which that development can occur.

Specifically, we have suggested that the provincial and municipal role is to create the physical infrastructure and appropriate regulatory climate, including tax and zoning by-laws and operating and development permits, which often hamper small businesses. It's been expressed to us that there's a need to continue to streamline the approvals process and remove the overlap between various levels of government, to lower the cost of the government component of doing business and to train the local leadership to lead the community.

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The federal role's big-ticket items, or big-picture items, are: employment taxes; a sound monetary system; international agreements to help businesses access international markets; a level regulatory playing field between provinces; the tax structure to encourage earning, saving and investing and/or reinvesting in business; and peace, security and a low crime rate.

One of the things people like about living in the rural areas has traditionally been the freedom from crime, noise and all sorts of things like that, and the feeling of safety. But that's been changing. The rural crime rate has been going up. When you're nervous about your own safety or the safety of your business from break-ins and things like that, it's very disruptive.

Assist with the physical infrastructure. There are some aspects of the national infrastructure that the local people in the provinces cannot do and that it's necessary to have assistance from the federal government on.

Remove the regulatory barriers. There are regulatory barriers still within the country and between provinces.

The suggested community and private sector role is that each community needs to develop its own vision and action plan, because as Dr. Chambers said, each community has different circumstances.

The other thing that's very important is that the members of the community all have to buy into that plan. It cannot be imposed upon them. Mr. Courtoreille had something to say about that, and I think it's very important. Implement the plans by involving the residents. It's very important that the development plans for the community be implemented by the community and not by some outside level of government.

Recognize and support the local leaders and plan for their succession. We've seen in community after community that a good leader will get the community up and going and the loss of a leader can leave the community rudderless. We believe there are ways we can participate in helping to develop leaders and that the leaders should receive appropriate recognition.

Work together to attract investment rather than competing in an unlimited manner. Too often we see communities giving away tax concessions, land and so on in order to try to bring development into their area. Or we might see them competing for a hospital or a school or to get money for a hockey rink or something like that when indeed what they should be doing is working together to get one for both communities or several communities, or attracting people to the area or the region, instead of spending themselves poor to have something unique in their community. Hopefully we've made a start on that.

Reduce overhead by sharing services. That's very similar to the other one. For many things, such as medical services, fire, road plowing and so forth, every small community seems to have a need, or at least has in the past had a need, to have its own fire truck, its own snow plows and so forth. Very often they don't have enough work for them to do; they sit idle most of the time and are very expensive.

The role of the private sector is: to help develop skilled people, and certainly Syncrude and Suncor have been doing that; to provide marketing leadership to find markets for the products and find out what's needed; to help the community implement its plans; to create employment; to reinvest their profits within the community; and to identify and pursue opportunities.

We see a number of barriers to development in the rural areas. Again, they don't apply to every community, but overall they're important.

One is lack of information about opportunities. Access to the Internet and things like that can help, but basically this takes a lot of individual research. Others are: lack of focus on concrete goals; inadequate infrastructure to capitalize on the opportunities they do have; lack of amenities needed to attract and keep new residents; restrictive regulations and standards; lack of skills and know-how. The rest of them are pretty standard barriers to anything.

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We also strongly believe the opportunities for growth come from within the community. We don't think there will be very many small rural Alberta towns that are going to attract a Syncrude. It's just not going to happen. It's a very unique situation here in Fort McMurray. Most of the growth in the small communities will come from entrepreneurs who were born and raised within the community and trained there. We believe they're the powerhouse of the economy.

I'd like you to think about an analogy of a flower. Let's suppose we have a flower. It's a bud, a rosebud. If we want to open that and let the community or the business flower and we try to pull it apart, we destroy it. If you give it light and water and fertilizer, it will open and bloom by itself.

We believe the role of government is to provide the light and the fertilizer and the water, but to let it open by itself. We do not believe government can open the economy in a small economy, but we do believe it can provide the necessary regulation and infrastructure to allow it to bloom on its own. I've said here you can't force a person, a crop, or an industry to grow, but you create the nurturing support or climate within which it is able to grow and its growth is encouraged.

I would like to end something Dr. Ernesto Sirolli said. Right now in your community, let's say any community, there are people with dreams to improve their lot, which, if realized, would change the economic fortunes of the entire community. We believe the growth in the small communities will be realized by the dreams and the ambitions and the skills of the local residents. Our role is to support them and make sure they have the appropriate infrastructure within which they can do that.

The Chairman: Thank you very much, Mr. Price. I'll open it up for a couple of questions.

There are no questions from the floor. Your presentation was obviously effective.

I appreciate the fact that you've given us a series of slides and I know we have copies of those, detailing the various aspects we have to take a look at and detailing some of the barriers and some of the components of a good economic development strategy for a rural area. I really do appreciate the fact that you've provided that testimony. I understand you're also going to join us this afternoon.

Mr. Price: Thank you very much, Chairman Mitchell.

One thing I'd like to add is that in addition to the picture I've just provided, we are working on specific strategies to achieve it. Unfortunately they were not ready to be shared with you today. However, I hope I can send them to you at a later time, before you've completed your studies.

The Chairman: We would certainly appreciate that and give you the opportunity to table those in front of us. It would be very helpful. Thank you.

The meeting now stands adjourned.

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