EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 4, 1995

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[English]

The Chairman: Colleagues, we will begin.

Today we have the distinct pleasure and honour of having the minister before us again. Welcome.

Hon. Ralph Goodale (Minister of Agriculture and Agri-Food Canada): Thank you, Mr. Chairman.

The Chairman: You're back fresh from some meetings with the Americans, I understand.

Mr. Goodale: Yes, yesterday in Washington.

The Chairman: You don't have too many bruises, so I think you survived the meetings.

Today we'll be discussing the main estimates. I take it you'll also be commenting on future expenditures...or just on the main estimates?

Mr. Goodale: It's a bit of both, Mr. Chairman.

The Chairman: Please, begin.

Mr. Goodale: Thank you very much, Mr. Chairman. I had the opportunity about 13 months ago to meet with the committee about the estimates for last year, and I'm pleased to have the opportunity to be here again.

I know you have already had the opportunity to step through part III of the estimates, so I don't intend in my opening remarks to dwell too heavily on the details. I'd be happy to try to wade into those details in response to your questions, but I would like to make a few remarks about the direction in which the government is proposing to go.

The Chairman: Could you also first introduce those people with you, for the record?

Mr. Goodale: Yes, Mr. Chairman, I was just about to get to that.

The Chairman: That's good.

Mr. Goodale: Members of the committee will know Mr. Frank Claydon, who's the assistant deputy minister in the department responsible for policy. Also at the table with me are: Michelle Comeau, assistant deputy minister for market and industry services; and Mr. Gordon Dittberner, who is responsible for our finance and administration section -

The Chairman: Whom we've had the pleasure of having in the last few days.

Mr. Goodale: Yes, I understand that, in terms of making this mass of material a little more understandable and user friendly. I trust that over time we'll make some progress in that direction.

Mr. Chairman,

[Translation]

last year, some people said that my department's budget reflected the priorities of the previous government.

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As was promised last year, I am presenting you with the Ralph Goodale plan, a three-year plan set within the framework of the Red Book priorities, of my vision of the sector and of the document entitled Securing our Future, published at the same time as the budget.

[English]

I have heard your request to have greater input into the decisions we make in the budgetary process, so committee members will have a window of opportunity, if you will, from now until the fall to examine every part of our operations as described in the material that has been tabled with the committee. You will also have the opportunity to cross-examine all of my assistant deputy ministers and to get a sense of what we are doing and what we should be doing in Agriculture and Agri-Food Canada.

While the committee goes about that task, if I could make a suggestion, Mr. Chairman, I would suggest that you think of my department's budget as a pie that's been cut into basically seven pieces representing our various priorities: trade and market development; supply management; research; farm income and stabilization; inspection and quarantine; adaptation; and others. If you think these are the wrong pieces, or if you think they're relatively the wrong size, or if you think the ingredients in the pie are in the wrong proportions, then I would very much like to have your suggestions for what to change.

In presenting those ideas, which I will certainly welcome from you, I would ask that you adhere to the same fiscal discipline that I have to adhere to. If I want more to spend on a certain priority within my department, I simply don't have the luxury of saying, well, the pie should be made bigger. The fiscal framework is what it is. If you feel that more money should be directed in a certain area, I would ask you to couple that recommendation with some clear advice as to where the additional money for that area should come from. If you would tell me precisely what you would cut from one portion of the pie in order to fund something more in another piece of the pie, that would certainly be very help in terms of assessing our priorities.

My department is the first one to provide a three-year plan for our estimates. Over the next year we will be working with you to try to make part III of the estimates, which doubles as our annual report, as you know, more user friendly so that for the committee and the general public the information is clear and understandable.

What we have put out thus far is unprecedented in terms of the volume and the detail of information so that the people in the private sector in agriculture and agrifood can make their investment plans with the greatest possible amount of understanding and certainty about the future. The details have not all been settled, but with the framework we've put in place, I believe our agriculture and agrifood sector now has a better road-map to determine exactly where we are going and where we should be going.

We've obviously had to make some hard choices, and I think in that process we have also achieved some significant successes. We have undertaken the most significant reform of spending ever in the agriculture and agrifood sector. Since the budget, the Secretary of State for Agriculture and Agri-Food and also for Fisheries and Oceans, the Hon. Fernand Robichaud; my parliamentary secretary, Lyle Vanclief; and I have undertaken extensive discussions with all the various parts of the agriculture and agri-food sector to explain and clarify various elements of the budget and to seek their further views.

One of the important messages I've heard from those representatives of farmers and farm organizations and agribusinesses is the need for governments at all levels to work harder at removing impediments to growth in the marketplace. Almost everyone has his or her own story about how government regulations or government policies or government actions impede them from earning additional income through diversification or processing or reducing costs or whatever.

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The need to unleash the energies of our sector, particularly in rural Canada, is even more important as government subsidies decline.

I would like to address the belief held by some people that Agriculture and Agri-Food has paid too high a price in the recent budget. In fact, we have done our fair share in the crucial fight against the deficit - no more, no less.

As you know, the department's budget has been reduced by 19%, spread over the next three years. Well, 19% is exactly equal to the average cut for all federal departments right across the entire government. In addition, the personnel reduction of 18% closely mirrors the 19% budget reduction overall.

On the issue of regional equity, when we add together the combined impact of all of the budget measures - the spending cuts on one side, plus the revenue increases on the other side - and then analyse how that overall budget impact is distributed across the country, we find that the budget's impact is very closely in line with each region's share of the total population and each region's share of total federal spending. So there is fairness and balance in the tough decision-making that we've had to go through - east and west, farm sector by farm sector, and for the agricultural sector overall - in comparison to every other sector of the Canadian economy.

Hand in hand with the necessary spending cuts, we are implementing a broad agricultural adaptation and rural development package to ease the transition from the old economic environment to the new and to better position the agriculture and agrifood sector for the future. For the most part this morning I would like to summarize the key elements in that package.

I would like to start with western grain transportation.

The Crow benefits subsidy to the railways under the Western Grain Transportation Act - that's about $560 million annually - will be coming to an end consistent with a national policy decision to terminate all subsidies for the transportation of goods everywhere in the country. This is not a policy that applies only to western Canada.

As the WGTA comes to an end, the Government of Canada is providing substantial adaptation assistance. As you know, we will make a one-time $1.6 billion ex gratia payment to prairie farmland owners. In cash terms, this amount of money is equivalent to what it would take to phase out the existing WGTA subsidy gradually by equal annual reductions over a period of nearly seven years. We are striving to enhance the value of that money by delivering it in the form of capital to minimize taxation and by delivering it up front to put the time value of money into the hands of its recipients and not the government. We will also administer this payment in a manner designed to foster a fair sharing of the $1.6 billion among farmland owners and among farm operators who may be tenants.

In addition, we have budgeted a further $300 million spread over five to six years as a WGTA adjustment fund to cushion the costs associated with freight pooling changes, changes for the alfalfa dehydration industry, rural roads, trucking, and short-line rail services.

We are also proceeding with a package of rail transportation reforms to help generate a faster, cheaper, and more efficient system, one that delivers on time for farmers at the least possible cost and one in which the cost savings are fully and fairly shared among all the stakeholders, including most especially farmers themselves.

The new regime will include, among other things, a legislated maximum freight rate formula for a transitional period and, for the first time, the application to grain traffic of the pro-shipper provisions of the National Transportation Act.

On the broader and truly exciting issue of diversification and value-added economic growth, I will be launching a full-scale initiative early this summer to bring all of the stakeholders together in a concerted drive to capitalize upon the new opportunities that will emerge after a century of freight rate discrimination is brought to an end.

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Mr. Chairman, let me turn to the issue of feed freight assistance. I mentioned earlier that the termination of transportation -

[Translation]

Mr. Chrétien (Frontenac): We are having problems with the interpretation. Mr. Minister is reading much too fast. Could he supply the interpreter with a copy of his text? This is the second time we lose parts of the presentation which are extremely interesting, Mr. Minister. Would you not have another copy?

[English]

Mr. Goodale: Unfortunately I don't have another copy, Mr. Chrétien. But I will proceed more slowly so it's translatable. My apologies.

I'm just turning to the topic of feed freight assistance. I mentioned earlier that the termination of transportation subsidies is a national policy affecting not just the WGTA on the prairies. In the Atlantic provinces, eastern Quebec, northern Ontario, British Columbia, and the territories, the feed freight assistance program, the FFA, has provided about $15 million a year to offset shipping costs for those feed-deficient regions of the country. As you know, the FFA is also being discontinued.

To ease the transition away from that particular subsidy, we have established a $62 million FFA adjustment fund to be invested over the next ten years in close consultation with the provinces and with all the affected stakeholders to help ensure the continued viability of agriculture, and most especially livestock production, in those regions of the country that previously benefited from the FFA.

Certain transportation costs in the maritime provinces and the Atlantic region have also been subsidized through two other programs known by their acronyms, the ARFAA and the MFRA. These too are being terminated, for a saving of about $100 million per year. The transport department has established an adjustment fund, again to facilitate the adjustment process for those who used to depend on the ARFAA and MFRA in the maritime and Atlantic regions.

Let me comment briefly on safety nets. Over the past decade the federal government and the provinces have struggled to devise a workable system of agricultural safety nets, something reasonable for farmers to fall back on when weather conditions impair production or markets turn sour. For many years governments seemed to be lurching from crisis situation to crisis situation, with expensive and ad hoc programs and no apparent long-term game plan. In our red book platform document, before the 1993 election, we pledged to pursue a national whole-farm income stabilization program, one that was universally applicable, consistent with the new GATT, production and market neutral, actuarially sound, fiscally responsible, and user friendly from the farmers' perspective.

In December 1994, after a year of intensive consultations with the provinces and with farm organizations, we achieved a national consensus on the future design of farm safety net systems. We are now in the process of putting the principles that were agreed to together in an omnibus memorandum of understanding to become effective, we hope, for the 1995 taxation year.

In budgetary terms, our national envelope for all forms of safety nets will be getting smaller by 30% over the next three years. It will drop from an $850 million allocation this past year down to the $600 million level by 1997-98. The provinces will contribute about $400 million. So the total long-term pool of funds, federal and provincial, for safety nets will amount to about $1 billion annually, $600 million from the Government of Canada, $400 million from the provinces. Funding for adaptation and innovation can very much be part of that equation.

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Briefly I will mention the dairy subsidy. The dairy industry is also being affected by the budget reductions. In parallel with the cuts applicable to safety nets, the national dairy subsidy is also being reduced by about 30%. We will engage the dairy industry in detailed consultations, in the period immediately ahead, upon the most effective use of the remaining moneys in the dairy subsidy to strengthen and enhance the dairy industry.

Let me turn to the issue of rural development, because I know that is a topic many members of the committee are very interested in. It is certainly a topic that has a high priority with organizations such as the Canadian Federation of Agriculture.

In addition to all of the specific initiatives I have mentioned, we have also established a national agricultural adaptation and rural development fund of $60 million per year. Working with farm organizations and the provinces, and certainly with the benefit of the advice of members of this committee, we will use this fund to support a refocused Canadian farm business management program; a new national farm income review process; a Canadian agriculture health and safety plan; the implementation of internationally accepted inspection standards by small and medium-sized food processors who may be interested in exports but need the inspection standards to support their exports; professional business planning for small enterprises that are related to agriculture; the 4-H movement; certain transportation adjustments; the enhancement of rural infrastructure, including information technologies and greater rural diversification.

We will augment this effort by enhancing access to pools of capital for farmers and for rural enterprises. We will do this by doubling to $3 billion the volume of private sector loans that will qualify for a government guarantee under the Farm Improvement and Marketing Cooperatives Loans Act.

If necessary, we will also expand the current mandate of the federal Farm Credit Corporation. On that particular topic, Mr. Chairman, I would be very interested in the views of this committee as to the desirability of an expansion in the mandate of the FCC and, if it is desirable, the nature of the expansion.

None of the things I have mentioned constitute a hand-out. What we're offering is a hand-up to encourage the agriculture and agrifood sector to grow, diversify, modernize, and strengthen its bottom line, all on a solid economic foundation, with nothing artificial.

Our success in all of this is of course heavily dependent upon Canada's success as one of the world's largest trading nations. About 25% of our gross national product is derived from trade - and agriculture, as all of us know, is especially trade oriented.

The Organization for Economic Cooperation and Development, the OECD, has projected that the new GATT agreement can give the Canadian economy an $8 billion boost by the year 2002. To bring that kind of projection to reality, at least insofar as it relates to agriculture and agrifood, we must be especially effective in penetrating new markets, in places like the Asia-Pacific region and Latin America in particular, which are the fastest growing economic zones on the face of the earth.

That's why I have devoted a considerable amount of my time and energy over the past 18 months to leading agrifood trade missions to Japan, Korea, China, Hong Kong, Europe, the United States, northern Africa, Mexico, Chile, Argentina, and Brazil, and I will continue to do so because these missions pay off. For example, since our trade missions to the Asia-Pacific region just about a year ago now, Canadian agrifood trade in that region has increased by some $400 million.

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I know from these missions that Canada is highly respected. Our customers appreciate our full-service approach to trade and marketing. We recognize in Canada that trade is a two-way street. It must be mutually beneficial and respectful, and it must be founded upon long-term relationships, not just hit-and-run sales. Our customers also know that Canadian quality is second to none in the world.

On the critical side, our customers tell me we must be more competitive in our pricing, we must do better in delivering precisely on time, we must diminish subsidization, and we must expand beyond bulk exports of raw commodities into more value-added finished consumer products. These are among the very challenges that we started to address in the February budget.

Where do we want to get to in world trade? By the year 2000 we have set a minimum target of $20 billion worth of Canadian agrifood exports. That's a 33% increase over our 1994 performance of $15 billion. In fact, we would like to do better than that. We would like to recapture Canada's traditional 3.5% share of world agrifood trade. In recent years we've slipped below the 3% level. If we can get back to 3.5%, we would increase our agrifood exports to $25 billion worth, and that's what we're shooting for by the turn of the century.

The private sector, of course, has to lead the way in our export initiatives. That's why they are included in very strong numbers in each and every trade mission that we take abroad. Beyond that, we will establish a Canadian agrifood marketing council to ensure effective private sector advice on all our marketing initiatives. We will create an agrifood trade service to coordinate all federal trade programs through a single window of access for exporters.

We will consolidate and simplify all of our market development programs into a streamlined agrifood 2000 initiative. We will establish a new electronic agrifood trade network to provide timely market intelligence to our producers and processors. We will create a new agrifood credit facility to support up to $1 billion worth of new sales to commercial buyers around the world, and we will continue to vigorously defend the Canadian national interest while we seek to remove trade irritants and settle old disputes, especially with the United States.

Mr. Chairman, there are several other important ingredients in our agriculture and agrifood strategy, such as our drive to simplify regulatory regimes and to streamline our inspection services. But let me mention this morning just one other priority, which I know is of great interest to this committee, and that is our commitment to agricultural research and development.

Here again there are budget implications. We had to find a way to save about $50 million from our research spending over the next three years, while at the same time not short-changing the critical science that we need to keep pace with the rest of the world. We managed to square that difficult circle, I believe, in the following ways.

First of all, we have cut back on fixed overhead expenses, both in facilities and in personnel. We are closing seven smaller research locations across the country and we are terminating certain projects where the benefits were mostly of a local nature or were fully portable and could be achieved elsewhere.

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Second, we are transforming our remaining 19 research centres into genuine national centres of excellence, with focused national mandates and the necessary critical mass of scientific expertise to deliver on those mandates. They will be strategically positioned to better reflect industry strengths and competitive advantages in the geographic regions in which they are located.

Third, we will be reallocating into research some of that $50 million that we will save in lower overhead expenses over the next three years, starting with about $11 million in 1995-96 and growing to more than $35 million by the year 2000. We will fund a program that we call our matching investment initiative. We will invite the private sector, farm organizations and agribusinesses, to match us dollar for dollar. We will jointly set our R and D priorities for the use of these funds and we will ensure that the projects undertaken are fully focused upon what the agriculture and agrifood sector considers to be most important.

Our federal dollars, if they are fully matched by industry, by the end of this century could be levering more than $70 million each year into new agricultural research and development. That is compared against the original saving of $50 million. Actually, by the end of this process there will be more money into agricultural research and development, not less.

What does the future hold? You have our plans before you. They are not absolutely cast in stone. The consultation processes we've begun on the WGTA, on feed freight assistance, on the dairy subsidy, and on other matters will ensure that we shall get where we're going in a way that best reflects the needs of this very important industry in Canada. The further input of this committee will help in that process, as well.

[Translation]

The main objectives of our government and of my department are growth and security, and neither of them is negotiable, although the means to reach these goals are. Therefore we are open to all your suggestions.

[English]

I hope these few remarks have been useful. I know that the committee has set up meetings with the department's assistant deputy ministers, where you will no doubt want to explore much of the detail or technical matters at considerable length. I hope those discussions will be worth while. I will very much look forward to receiving the further advice of this committee about the priorities of my department.

I have one final comment. I believe the clerk has copies of a chart entitled ``Securing our Future - Resource Summary''. This is the pie chart I referred to at the opening of my remarks. The chart indicates how we have distributed our spending in the 1994-95 fiscal year, where we will be in 1997-98, after the budgetary changes, and the shifts that occur in the sections of the pie chart as we go through that three-year cycle. I would certainly welcome the comments of the committee on the allocation process within that pie-chart depiction of the spending of Agriculture and Agri-Food Canada in terms of that critical question of whether we have the priorities right and where the committee would recommend some possible changes.

I'll be happy to have your questions.

The Chairman: Thank you, Mr. Minister.

Mr. Chrétien.

[Translation]

Mr. Chrétien: Mr. Chairman, I was going to make a suggestion. In the spirit of democracy, and out of respect for the opposition, could you first grant 10 minutes to each of the parties, namely the Bloc, the Liberal Party and the Reform Party, and then five minutes for each intervener, and if time permits, more questions in a second round? We have several questions that we would like this morning to put to the minister.

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My first question deals with the page 110 in the French text of Part III of the Estimates where it is indicated that dairy policy should be one of the focuses of the analysis in 1995-96 because of the repercussions of the implementation of bovine somatotropine in Canada. Do we take from that that the department has no doubt whatever as to the use, in 1995-96, of BST, taking into account that the moratorium expires in less than two months? Still on the topic of BST, what is the state of the discussions between your department and the Department of Health?

[English]

The Chairman: It's page 102 in the English documents.

Mr. Goodale: Thank you very much, Mr. Chrétien, for that important question. The Department of Health is of course legally responsible for the regulatory decisions to be made as to whether or not to issue a notice of compliance with respect to a product such as rBST. To the best of my knowledge, the analytical work continues to go on within the Department of Health and the department has not at this stage made any decision as to whether to issue a notice of compliance. No notice of compliance has been issued to this date.

The responsibility for that decision is completely that of the Department of Health, and quite frankly, my department is not consulted on that regulatory issue. That's a health issue, their full and complete legal responsibility.

My department is concerned with other issues, the same issues that were the subject of this committee's review just over a year ago. I think that work by you, Mr. Chairman, and by members of this committee was very useful and constructive. You made a number of recommendations, and to a very large extent we have complied with those recommendations.

Part of what was suggested was ensuring that rBST was not introduced or used in Canada, whether or not a notice of compliance might be issued by the Department of Health, until further information had been brought forward and analysed with respect to a variety of specific questions, which this committee enumerated. We successfully negotiated with the manufacturers of rBST to provide a year's voluntary delay on their part before they would even attempt to bring that product into Canada, whether or not a notice of compliance might be issued in the meantime.

As things have turned out, that year has virtually gone by and still no notice of compliance has been issued. When, if ever, a notice of compliance might be issued, I simply don't know. That's the responsibility of the Department of Health and they will make their decisions in due course.

We have used this past year for the purpose the committee recommended. That was to conduct a task force review of a number of specific questions. I am advised that when I get back to my office the report will be available for me to look at. I have not yet had the opportunity to look at it, but as soon as I do, I will no doubt have some comments to make about what's contained therein. I have not had an opportunity to look at it yet.

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The Chairman: Thank you, Mr. Minister.

Colleagues, I am wondering if we could maybe just pretend this is Question Period today, so that we can get as many questions in as possible. Make the questions short and the answers short, because we have a short period of time and we have virtually everybody who wants to ask a question.

Mr. Chrétien.

[Translation]

Mr. Chrétien: I'm going to ask you very brief questions, Mr. Minister, because you know that we expect short answers.

In conformity with the agreement signed by Canada and GATT and NAFTA, more specifically in its subsidies to exports, your department went very far in its cuts to agriculture whereas our main competitors from Europe, New Zealand and the United States did not impose such far-reaching cuts, does your department and yourself think that our farmers will have to bear with greater financial difficulties, that it will considerably jeopardize the farm turnover in that hundreds, even thousands of Canadian farms will be abandoned?

[English]

Mr. Goodale: Mr. Chairman, it is true that the budget included a number of reductions affecting agriculture. Mr. Chrétien made reference to the need in part to do that in accordance with our international trading obligations. There are also other important reasons why these spending reductions were both appropriate and necessary.

One of those, of course, is the fiscal situation facing the country and the government, and the need to reduce the burden of deficits and debt. The country was facing an annual deficit in excess of $40 billion. The country was facing an accumulated federal debt in excess of $500 billion. The interest charges just to service the debt were running in the order of $120 million per day. Obviously, the fiscal imperatives were clear and pressing and needed to be responded to.

In addition to that, there is an obvious need to make changes because of our requirements to be more efficient, to be more productive and to be more competitive. There is obviously a requirement for change also because Canadian agriculture wants to become more diversified, achieving value-added economic growth and generating the jobs that come with that.

There is also, of course, the pressure for change that comes from the march of science and technology. In addition to the requirements of international trade, there are a range of other reasons why changes, including budget reductions, were and are necessary. I would refer members of the committee not only to the budget documents, and particularly the document entitled Securing our Future, but also to the summary remarks I made this morning to try to make the point that we very much recognize the magnitude of this change.

It is probably an era of change in Canadian agriculture that is unprecedented in history. In order to make that change more achievable, to ease the transition from the old economic order to the new, to facilitate adaptation and to position farmers and our agricultural sector not only to deal with the current changes but to take on the future, we have initiated all of the various measures I have referred to today as our agricultural adaptation and rural development package - to address the very kind of problem that Mr. Chrétien has referred to.

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These changes are big, yes, but so are the opportunities that come with them if we're able to manage this era of change in a constructive way. I think we've put together a package in the budget that will do that.

Again, I would underline one final remark that I made in my presentation this morning. The principles are set out here. The directions are set out here; but in terms of the detail I would very much welcome the recommendations of all members of this committee about how we can make this adaptation and transitional process not just acceptable, but beyond that make it truly successful from the point of view of Canadian agriculture.

The Chairman: Thank you, Mr. Minister.

Before we move on to Mr. Easter, I want to follow up on something I thought Mr. Chrétien might ask later on, which was, when do you expect this committee will see that rBST report?

Mr. Goodale: Mr. Chairman, I would ask you to give me a chance to read it myself. I'll do that forthwith, and as soon as I've done that, probably over the course of this coming weekend, I will, if I may, write to you as chair of the committee and indicate exactly what my further plans would be in terms of the dissemination of the report. I will try to give you a definitive answer to that question no later than Monday morning.

The Chairman: Thank you.

Mr. Easter.

Mr. Easter (Malpeque): Welcome, Minister.

I too was seriously concerned to see that comment on BST in this report. I certainly took it as an affront to the committee, because the committee had outlined very serious concerns. For that comment to be in the estimates is in my opinion unacceptable.

Last year during estimates, the committee had raised some concerns about the department not having goals that were measurable in terms of farm numbers. We're talking, as you're suggesting, $23 billion by the year 2000 in exports. That's great, but what does that actually mean back to the primary producer? How many producers are we talking about having on the land in the year 2000 and 2005?

We requested those kinds of goals by which we can measure how well the department is doing. We said we should be able to see them last year, and they're not here. I might say too, Mr. Minister, that there's no question in terms of the department's budget that we're doing our share, but we're caught with the double whammy effect of the transfer.

Other department cut-backs are swinging in to cost the farm community money. One of the concerns I hadn't expressed yesterday was - and you raised it as well - where should the pieces of the pie be? I think, as a committee, we had to be careful not to get trapped into talking about whether a dollar should go there or whether it should go here, but what the overall thrust of the policy should be.

So turning to page 40, in which you're talking about the proposed activities for cost-sharing with industry - and I'll point out what I mean - last year as well we talked about how benefactors should pay rather than users. I guess on those cuts there, every one of them when you go through them, whether it'll be cost-sharing, there are ways through which industry can back down those costs to the primary producer.

Although the ordinary consumer will benefit from health and inspection, the cost is being borne by the farm community. So what will be done to ensure that the farmer doesn't carry that burden of cost and it's balanced out among the benefactors?

Mr. Goodale: Mr. Easter, you've raised several subjects. I'll try to deal with each of them fully but briefly.

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First, with respect to the reference on page 102 of part III to rBST, that reference should not - underline not - be read as an assumption that rBST will ultimately be approved. That's obviously not for me, or I guess any of us, to say at this moment. That's a regulatory decision that needs to be taken in due course by the Department of Health. They will decide yes or no whenever they get around to making that decision.

As you will know, not only this committee through its work last year but also other representatives of the dairy industry, like the Dairy Farmers of Canada and the National Dairy Council, have asked for further analytical work on the economic and other impacts of rBST. It's obviously important for us to have that analysis in hand so we shall know what the consequence may or may not be.

I would advise the committee that earlier this week I had the opportunity to meet with the national executive of the National Dairy Council and they made it abundantly clear that they have grave reservations about the potential impact of rBST. They welcome the analytical work that has been done so far to find the hard facts and arithmetic, including most particularly on the consumer experience in the United States, but I think they would say - and I don't mean to put words in their mouths - that they think further information is required before final advice is given.

So that phrase on page 102 is intended simply to indicate the nature of the work that is done and needs to be done. It is not meant to say that a certain outcome has already been prejudged. It has not already been prejudged.

On the issue of the transportation reductions and whether or not those transportation reductions included not in these estimates but in the estimates of the Department of Transport, when added to these estimates, result in a disproportionate burden with respect to agriculture, I have made the point that the specific cuts relating to my department work out to 19%, which is exactly, on average, what all departments of the federal government are being asked to do. Some departments with economic portfolios are reducing by more than that. Some departments with social portfolios are reducing by less than that 19% amount. On average across government it's 19%, and Agriculture is exactly on the average.

It is true that when you add budget impacts from the Department of Transport that relate to agriculture onto our 19% in agriculture, that figure goes up to a higher percentage. But you also then have to add back in the offsetting transitional measures that are being put in place to deal with some of those transportation issues to get an accurate picture. If you're going to add in the extra Transport reductions, then you also have to add in the extra Transport compensation adjustment and adaptation measures. When those are added back in, the percentage again is 19% - not higher, not lower. It's 19% over the planning period of three years.

The arithmetic that we have put before you I think is dead-on accurate on that point.

With respect to page 40 in the estimates, which deals with the business alignment plan of the Food Production and Inspection Branch of Agriculture and Agri-Food Canada, we have been faced with the difficult challenge of maintaining Canadian inspection standards, which are in fact the best in the world. They are one of the keys to why we are successful in domestic and international marketing. Our customers, whether they be Canadians or customers in other international markets, know when they buy from Canada they can absolutely, 100%, count on the quality and safety of what they're getting. It is critical to us that we maintain that international reputation.

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In order to maintain that international reputation and yet save money, we have an interesting challenge on our hands. What our program includes is cost reductions, where possible - that is, identifying those aspects of our activity that may not be necessary and eliminating them - cost savings, where we can find more efficient and effective ways to do what we're doing, but do it more cheaply; cost sharing, where a private benefit is conferred by our inspection services, inviting the private sector beneficiary to make a contribution to the services that are being provided; new technology, which has significant potential to help us maintain our inspection standards, but with the benefit of science to do it more cheaply; and finally something that will take on greater importance over the course of the next few years, the development of a fully coordinated, fully streamlined, national Canadian food inspection system, which will deal with the issue of duplication and overlap in our existing inspection systems.

There are some instances where a food establishment or food product might get inspected by the Department of Agriculture, by the Department of Health, by the Department of the Environment, and perhaps some other federal government departments, plus a variety of provincial government departments, plus in some circumstances a municipal level of government. What we'd like to achieve is a system where we can avoid that layering of inspection upon inspection upon inspection and have one national Canadian food inspection system that does the job absolutely right, without all that duplication and overlap. I'm pleased to say my provincial colleagues are also enthusiastic about working in that direction. I hope we'll achieve it.

The Chairman: Mr. Minister, you're going to get me lynched at the end of this. Mr. Easter is typical in getting about three or four questions. He's had one shot at it and I have to turn now to Mr. Johnston.

Mr. Goodale: Don't lynch me, Mr. Chairman, lynch Mr. Easter.

The Chairman: I know you're excited about all the wonderful things we're doing in agriculture, but if we could move on....

Mr. Hermanson.

Mr. Hermanson (Kindersley - Lloydminster): It's good to be have the minister before the committee.

Mr. Goodale, you've said agriculture has taken the same hit in the budget as all other government sectors. I think you used the figure 19%. Of course averages are wonderful instruments, but it reminds me of the story about the naked fellow whose hair was on fire but who was sitting on an ice cube. On average the temperature was fine, but he had some real problems.

Mr. Goodale: That must be a Reform Party habit.

Mr. Hermanson: I think it describes this agriculture budget, and Mr. Martin's budget in general. We're seeing up to a 30% decrease in safety net support programs for agriculture. We're seeing significant reductions in research, to be made up by support from the private sector, which is a good objective, but there doesn't seem to be any means of accomplishing that. There's no plan in place that we've been aware of to accomplish that.

.0905

There's going to be a reduction in spending before the private sector moves in to make up the difference. Of course, the Crow benefit is being entirely discontinued, without any efficiencies coming into place that we can see, on August 1. In fact, the transition program is budgeted for the 1996-97 budget, while the Crow benefit is eliminated as of July 31 this year.

So there are some real problems. How can you justify the low priority that the government has placed on agriculture in reducing it's budget by about 19% when, say, the CBC was only reduced by 4%; Indian and Northern Affairs received a $285 million increase in one year - that's almost equal to the entire Crow benefit transition fund over, I believe, 6 years. Obviously agriculture has a low priority compared to some other areas of federal jurisdiction perhaps that Canadians would give a lower priority to. I sense goodwill towards the agriculture industry right across Canada.

Certainly agriculture is prepared to take their fair share of cuts in difficult economic times, and as you know, Mr. Goodale, we have not been critical of the federal government for cutting, but it has to be fair. You can't escape criticism if there are winners and losers in the budgetary process. Obviously there are some winners, and that is in part at the expense of producers.

Even in the cuts to the agriculture department, the cuts are in the area of front-line service and support to agriculture; it's not in the middle and upper layers of the department. I have this with reliable sources, because I was speaking with a group of agrologists here in Ontario who in fact indicated that I was correct, that the cuts were the front-line service, the research. It was the people in the labs doing the work who were being cut; it was not the middle and upper layers of management.

How do you respond to these inequities in the budgetary process and the hit agriculture is taking, say, in comparison to Indian Affairs and Northern Development?

Mr. Goodale: Mr. Hermanson, if you look at the budget papers issued on budget night - -I don't have a copy of that immediately with me, but I'd be happy to forward a copy of it if it failed to come to your attention - you will find in them a complete description of the impacts of the reductions on every department in the Government of Canada. There are nine departments that are categorized as economic portfolios. Of those nine, Agriculture and Agri-Food Canada absorbs the least reduction. Every -

Mr. Hermanson: [Inaudible - Editor] Transport it's 40%.

Mr. Goodale: Let me finish, Mr. Hermanson.

Every one of those other departments takes a larger reduction than Agriculture. Of the economic portfolios of the Government of Canada, Agriculture is absorbing the least reduction - not the greatest, the least. When you add together all of the portfolios of government, including the social portfolios, you arrive at the 19% government-wide reduction, and Agriculture and Agri-Food Canada is exactly on the average - no more, no less.

As I said in answer to the previous question, if you are going to include in your calculations with respect to agriculture the reductions with respect to the WGTA, you also have to add back in the $2 billion in compensation over the next three years that is being provided with respect to the WGTA, which is not included in your calculations. If you're going to be fair, if you're going to make an accurate comparison of the cuts, also compare the compensation measures. When the compensation is added back in, the reduction is in fact 19% government-wide, including the transportation changes.

Mr. Hermanson: If that's your rationale, the money should be going to the operators of the land, not to the landowners in compensation for reduced land value. It doesn't make sense.

Mr. Goodale: Mr. Hermanson, I've had the opportunity to consult with 20 or 30 farm organizations over the course of the last month and a half or two months about how best to deal with the $1.6 billion capital payment. We have discussed this issue upside down, backwards, forwards and sideways, and based upon that input from the farm organizations in western Canada - not the political parties, the farm organizations in western Canada - we have concluded that this method we've developed for the distribution of the $1.6 billion is in fact the best and most equitable method to do it, especially when we have included in the method of distribution those particular measures I described in a presentation to the Canada Grains Council on April 11 for how to achieve an equitable sharing among landowners and land renters of the $1.6 billion.

.0910

The Western Canadian Wheat Growers Association, for example, on the day I made that speech in Winnipeg to the Canada Grains Council, issued their own news release saying they thought this was the most equitable way to deal with the situation. Various other groups and organizations in western Canada have since indicated that while there's probably no perfect methodology, this comes about as close as you can get to dealing with this issue in a proper manner.

In terms of reductions with respect to personnel, as I indicated in my remarks, our overall departmental reduction is 19%; the reduction in personnel is almost exactly the same, 18%. So we have achieved that balance between the delivery of programs, services, grants, contributions and all of the things we spend money on in a front-line way, as you say, compared to the expenditures we make with respect to staff and employees. The reduction is virtually the same, in one case 19% and in the other case 18%.

You referred to our plan on research and development. I was very pleased to hear your colleague, the member for Vegreville, say in the House of Commons and elsewhere that he supports what we're doing with respect to research and development.

Mr. Hermanson: The concept is right, but the timing is wrong.

Mr. Goodale: We have tested this, Mr. Hermanson. If you had been a member of the committee last year you would have known that we tested the matching investment initiative with a pilot project in 1994. We found it was extraordinarily successful. There was great enthusiasm among the agribusiness community and the farm organization community for this particular approach because it means a partnership. It means that the government and the private sector are fully involved in setting the priorities and in deciding where to invest these R and D dollars that will flow through the matching investment initiative.

As I indicated, over the next three years we have to save $50 million. We'll be doing that in the variety of ways that are described in the budget materials, but beginning in 1995-96 we are reinvesting a portion of those savings that we will make. The $50 million will be saved over three years. We will start reinvestment immediately through the matching investment initiative. About $11 million or $12 million of that will go into this year, a higher amount next, a higher amount the year after that, until we get to the year 2000 when we'll be putting $35 million back in. That will be matched by the private sector, so the total will be $70 million reinvested in agricultural research and development compared to the $50 million we will be saving on an annual basis.

As I said, this is not a shot in the dart. We tested it last year with a pilot project, and in fact it was oversubscribed within three months, indicating the enthusiasm for this particular approach.

The Chairman: Thank you, Mr. Minister. Mrs. Cowling.

Mrs. Cowling (Dauphin - Swan River): Mr. Minister, my colleague Mr. Pillitteri and I were on a trade mission to Taiwan with a number of other parliamentarians. We met with President Li, we met with the vice-chair of agriculture, and I had taken with me some of the various commodities that we produce on the prairies. I just wanted to reinforce to the committee here some of your statements.

We are extremely well respected in the Asia-Pacific Rim, and they want to do with business with us. They would be overwhelmed to have you come over with them. I'm following through on that with Vice-Chair Wang and sending him some other commodities out here that are of a value. I wanted to bring that up. I think it's important that people understand around this table that we are very well respected in the world.

As for questions with the WGTA, we've had a number of people before a subcommittee, and I want to say that the people in my constituency know we have to make the change and are prepared to change with respect to the WGTA.

.0915

However, one of the things we've heard from a number of industry people is that it should be shipper-driven and industry-driven. Have you had an opportunity to take a look at the Canadian Wheat Board proposal? We had Mr. Hehn before us yesterday, and I think it's a very good proposal. I'm wondering if you had a chance to look at that.

Mr. Goodale: I haven't seen Mr. Hehn's specific presentation; I no doubt will. When you say his proposal, specifically on what topic?

Mrs. Cowling: He was encouraging the subcommittee on grain transportation that it should be shipper-driven and industry-driven. I'm wondering what your thoughts may be on that?

Mr. Goodale: Is this on the freight pooling issue?

Mrs. Cowling: Yes.

Mr. Goodale: I will be having a conference call later this afternoon with all of the western Canadian farm organizations and other stakeholders in the transportation sector focused upon that issue, the Canadian Wheat Board freight pooling changes, and whether or not those changes should be attempted beginning in 1995 or whether we should delay the implementation of those changes until August 1, 1996. I appeared before Mr. Easter's subcommittee earlier this week to indicate that we were coming very close to a decision with respect to the freight pooling changes.

I think within the next very few days we have to make the go/no-go decision because it does require legislative changes if we are going to proceed. As you know, the calendar of the House of Commons is getting pretty crowded in terms of getting any legislation through between now and the date the House adjourns in June.

But the general notion of having the drive for reform and greater efficiency in our grain handling and transportation sector driven by ``the industry'' - and within that definition I would include most particularly farmers as the critical players in the industry - on that general principle I have no difficulty whatsoever. I agree completely that this ought to be a producer-driven, industry-driven initiative that obviously takes into account the very vital interests of the primary producer.

The Chairman: Mr. Pickard.

Mr. Pickard (Essex - Kent): Mr. Minister, I want to compliment you on the efforts you've made within the agricultural department. I certainly looked at the primary industries, the resource-driven industries, and I think agriculture has fared very well in our plans. I think you've stood up very strongly for agriculture in this country and I don't think that's said often enough. From this committee, I think it's an important point.

I have a concern about where this committee's going and what's happening. I've talked to the deputy minister and talked to anyone who has come in, because I feel that traditionally House sitting committees have always responded to what is happening rather than being proactive in developing policy and direction. I feel if we are looking for an expanded role for Parliament and members of Parliament of all political parties, I think we should be proactive in working with the department and with the industry and attempting to get the voice of that industry heard publicly.

That's part of the point. But secondly, it's also helping to be part of the development of some of the direction of this policy. For instance, you talk of Canada's role in expanding trade beyond our borders; the value-added in many sectors; the need to improve delivery time; the need to be more competitive on certain areas in the international markets. Those are areas where I feel this committee can serve a very useful function in attempting to be out across this nation, getting information, whether it's the community coming here or this committee going there and discussing and evaluating what the industry is doing.

.0920

Oftentimes it's easy to set up a committee and have that committee go out across the country and come back and report. I feel it is partially the function of the this committee, the parliamentary agriculture committee, that it should be doing much of that work and reporting back, giving all political parties that sit in the House a voice in the development of that, rather than the traditional role of just responding to agricultural policy that's set.

I know your budgets are set. I know your direction is set. You've clearly outlined where you're going. What is your perception of the role of this committee in the future? That's question one.

I will let you go ahead with that, and I want one question on what's happening with our research and development facilities.

The Chairman: You had better ask your question now.

Mr. Pickard: Research and development have been focused mainly on value-added. Are we putting a lot more emphasis on value-added now than on primary research on the primary products? Why that change of direction? Will it affect our primary research that's going on in Canada right now?

The Chairman: Mr. Minister, you've one minute to answer.

Mr. Goodale: Let me just say I welcome the work of this committee, whether it's here in Ottawa, poring through these mounds of paper with the financial analysis and the policy analysis, or from time to time across the country collecting valuable external input.

Mr. Pickard has referred to the need for diversification in agriculture and the drive towards value-added processing and further processing. That's critically important. If we're to get export volume up to that $23 billion level I referred to in my remarks, we won't get there by relying entirely on the old methodology of raw bulk commodities. We have to export more and more of the finished, further-processed consumer products.

There's a real thirst, I believe, in the agriculture and agrifood sector to achieve that diversification and value-added growth. To the extent this committee can make a practical contribution in identifying the opportunities for that to happen, I think that would be a very useful contribution to the discussion we need to have.

I know other witnesses have appeared before your committee and other committees saying yes, we hear all this talk about diversification and value-added growth, but how do we make it more than a verbal theory, to something that is really happening? Your work as committee members in helping the government and the agriculture and agrifood sector to identify those opportunities and how to pursue them, how to make them happen, would be critically useful.

On R and D, Mr. Pickard, I think there is a balance in our approach, where we continue through the basic funding of Agriculture and Agri-Food Canada to concentrate on the health and safety issues of our food supply, for example. Where we intend to use the matching investment initiative is with those new ideas such as value-added and new products and new commodities, where the private sector is helping to fund a portion of what we do. But a very large portion of what we do is still in the health and safety field, the fundamental research field, and that continues. I think we have a balance there. But you will see a growing emphasis on the growth side of the equation, because we need that growth to funnel right back to better incomes for farmers.

.0925

The Chairman: Mr. Minister, in terms of the matching investments, what happens if there's a private area where you don't do research? Will there be partnerships in terms of those areas, or will that funding be primarily used in areas where Agriculture and Agri-Food Canada does research? I'm thinking of the dairy industry, for example, where you might not have some expertise in certain areas.

Mr. Goodale: We're open to all sorts of partnership possibilities. Of course, within our research establishment, we will have a national centre of excellence with respect to the dairy industry, located at Lennoxville, Quebec. In using the matching investment initiative, if there are other areas beyond what Lennoxville is doing, or in conjunction with what Lennoxville is doing that we and the private sector can agree are good and valuable priorities, we would be anxious to pursue those sorts of ideas.

I presume at some point in your schedule my ADM for research, Dr. Brian Morrissey, will be making a presentation, and I think you could explore all of those options with him. I think this is a very exciting field and we're just beginning to scratch the surface of it.

[Translation]

Mr. Landry (Lotbinière): I am pleased to thank the minister for coming here to talk about agriculture.

Mr. Minister, my question will have to do with research and development in agriculture where there will be important cuts of $15 million this year. For me, this is quite unsettling, and Canadian farmers must also feel the same way because research and development are the backbone of agriculture.

There is also the closing of the Experimental Farm of La Pocatière, that was burned down a few years ago. Seven million dollars had been invested to expand the facilities and repair all these damages. I find that quite unfortunate.

What is your assessment of this closing down and how do you see the future in terms of research and development with such important cuts? Maybe you have other alternatives. That's what I'd like you to tell me, Mr. Minister.

[English]

Mr. Goodale: I very much appreciate that question. We had some very difficult decisions to make to achieve the level of savings that was required with respect to research. As I said, it is something in the order of $50 million spread over the next three years. Of that, $20 million flows from budgetary decisions made by previous governments prior to 1993, and about $30 million of the total results from the budgets of 1994 and 1995.

Part of that will be done by closing, unfortunately, seven smaller research facilities across the country. As you indicated, these include one at La Pocatière in Quebec; one at L'Assomption in Quebec; two in Ontario, with one in Thunder Bay and one in Smithfield; and three in western Canada, including one in Regina, Saskatchewan, one in Vegreville, Alberta, and one in Prince George, British Columbia, for a total of seven.

Once again, I think you'll see in the distribution of those closures we have tried to be equitable from a regional point of view.

In terms of La Pocatière specifically, I don't mean to be critical, but the nature of the work that had previously been done there was, to a certain extent, of a local nature. To a certain extent it was portable in the sense that research work could be done elsewhere and yet all of us in Canada could share the benefit of it. It did not need to be done specifically at that location. So we will be able to pick up some of the activity that had previously been done at La Pocatière in some other locations. Some of that may well occur in Lennoxville, for example.

.0930

After the two small reductions in Quebec, there will continue to be four national centres of excellence located in Quebec in Ste. Foy, which will deal with agricultural resources; Lennoxville, which will deal primarily with dairy and pork, but may also, if necessary, pick up some of the aspects relating to sheep that had previously been located at La Pocatière; St-Jean-sur-Richelieu, which will deal with vegetables and horticulture; and, of course, Saint Hyacinthe, which will deal with dairy and pork foods. So even with the reductions, our research establishment in Quebec will continue to be very large and very significant, with four national centres of excellence located there.

We have also had representations from some in the private sector in Quebec about the possibility of exploring different ideas by which they might find the means and wherewithal to carry on some kind of activities of their own at La Pocatière. Obviously we would be interested in having those discussions with anybody with a creative idea who might want to assume responsibility for the facility and make good productive use of it in the future. That's the kind of discussion I would certainly welcome and look forward to.

Mr. Steckle (Huron - Bruce): Thank you, Mr. Minister, for appearing before our committee this morning. In the spirit of our chairman who has asked us to be brief, I will attempt to do that. I have two questions.

The first question has to do with our supply management sector. Given the support that supply management has received or has not received in the past number of years, particularly perhaps in the previous government, where do you as a minister and our party stand in our commitment to the supply-managed sectors? We do recognize they are vital and very important in those areas where we're attempting to meet our overall objective by the year 2000. Are we going to be as committed to supply management in the future as we were at one time in the past, or do we have a diminishing spirit of support for supply management?

The other area you alluded to was the Farm Credit Corporation. I think it's a good instrument of finance for the farm community. It has been expanded in recent years, and that's to be commended. My view is that it should be further expanded. I think we need competition in the financial institutions, particularly as they are available to farmers. What is your view in terms of what might be expected in further expansion of that instrument to the farming community and to the value-added businesses that might be developed in the farm communities?

Mr. Goodale: Let me just say clearly and simply that the government's commitment to our supply management system remains very strong and very clear. Obviously we all went through a difficult period together at the end of 1993 as the GATT negotiations were coming to a conclusion. The new Government of Canada was elected on October 25. We were sworn into office on November 4, barely six or seven weeks before the finalization of the GATT in the middle of December 1993.

We went into those discussions with our first clear choice to salvage article XI. As you know, I travelled to those trade talks in Geneva and Brussels to make my own personal assessment about the chances of being successful in sticking with the old article XI.

.0935

I took some other people with me in order to get the benefit of their views and advice too. Our parliamentary colleague Lawrence MacAulay, a member of the cabinet, was with me on one occasion and the chairman of this committee was with me on another occasion, as was the parliamentary secretary Lyle Vanclief.

As we watched the ebb and flow of the international negotiations, as Canada stood absolutely firm on our insistence about article XI, we found the rest of the countries of the world dropping away like flies on that subject. We had a number of allies - at least we thought we did - in the Japanese, for example, the Koreans, the Israelis, the Swiss, and some others who held the same view as Canada held with respect to article XI.

But as the days ticked by in the so-called end game, as the time was running out for the finalization of the GATT in December 1993, it became clear that all of those other countries had changed their position and had opted for the new concept of comprehensive tariffication. It was not Canada's choice, but that was unequivocally the direction in which the rest of the world was choosing to go.

In the very last session of the GATT representatives, on the weekend before December 15, Canada stood absolutely alone as the only country in the world sticking by article XI. When we came to that very clear moment, when the rest of the world had now unequivocally gone in a different direction and we were totally isolated and on our own, we obviously had absolutely no choice but to accept this principle of comprehensive tariffication and to make the most of it.

I think in those final few hours and days, we did make the most of it with the benefit of the supply-managed industries that were with us in Geneva in great numbers to offer technical assistance and advice. They were very helpful in making sure we got the arithmetic right when we put together the initial schedules under the concept of comprehensive tariffication.

The result of all of that was that with those tariff schedules as we filed them on December 15, we have, I think, achieved an atmosphere within which supply management can not only survive but prosper for the future. Presuming that we can find the ways domestically and by cooperation and political will within Canada to achieve the disciplines of supply management that used to be imposed upon us by virtue of article XI, now without article XI and comprehensive tariffication in its place, we have to achieve those disciplines by our own political willpower.

Over the course of the last year, Mr. Vanclief has been leading a task force process with all of the supply-managed industries working toward that achievement of the greater cooperation and discipline on a voluntary basis rather than on a mandatory basis, and I think that process has achieved some very good results.

When the dates arrive in 1995, when the new GATT becomes applicable to our supply-managed industries, I'm confident that all of them will have made the necessary progress to be in full compliance with the GATT and still maintain the fundamentals of our orderly marketing system, which a great many Canadian farmers cherish.

The Chairman: Mr. Collins, Mr. Calder, and then Mr. Pillitteri.

Mr. Collins (Souris - Moose Mountain): Just in quick summary, Mr. Minister, I want to say to you and to your staff, as I said yesterday, I think they've done an excellent job in preparing the document for us and the material that's there.

It's easy to criticize when we're not well-informed, but to the staff in terms of what they've done over and above and beyond what is necessary, I think it's really helpful to us because there's no doubt we're not accountants; we need to have some direction as to where you see us going. I like the vision of projecting down the road three and four years to let us know where you see us going.

.0940

I have a number of concerns that I've raised before, and I would like you to respond quickly, if you would.

There seems to be an oversight on the WGTA with regard to the short-line rails with the western railway out of Alberta and the short line out of Saskatchewan. Hopefully that will be addressed somewhere, in the interest of protecting short-line rail.

With regard to safety nets out in Saskatchewan, what we see as a concern for young people who are going to try to get into farming is that the payment up front is very difficult. Is there a way of our structuring in a payment that could be spread over time?

The other part of the concern they have is the triggering mechanism. The delay mechanism is far too long in order for payments to come forward.

They have a concern about the transportation feature and the $300 million and where it will be spent. I know that my counterpart Mrs. Cowling is certainly concerned about Manitoba. I, from southeast Saskatchewan, have that concern as well.

Last, I would like to know where you see us going with regard to the retention of these community pastures. There is some thought in my area that if we have to review where we're going in the long term...is some thought being given to maybe taking some of these community pastures and turning them over to RMs, who may then take them on as projects of their own.

Mr. Minister, I think you've used the right approach. You've used the consultation approach, and I find it amazing when people question that kind of mechanism. We even had trouble trying to get this committee to go out into different areas of Canada to speak to the people, because we couldn't even get the support of the committee. At least you took the proper approach, and I know you're going to continue with it. To all your staff, I want to thank you for that approach.

Mr. Goodale: Mr. Collins, first I want to say how much I appreciate your remarks about my staff and my officials. Very often they're in the position of just absorbing criticism and not having the appropriate recognition of their efforts, and I appreciate the fact that you did that. I'm sure they do as well.

On the short-line issues, I too have received representations from the two short-line operators in western Canada about their position under grain transportation reform. I am discussing those matters right now with my colleague Mr. Young. You and those short-line operators may rest assured that we are looking at their situation with a very sympathetic eye and seeing what we can do to address their concerns.

On the issue of the up-front payment of the $1.6 billion, again that was a matter upon which I consulted with a great many of the farm organizations. Those farm organizations obviously had a difference of view with respect to quantum. Where they would have argued for something more in the order of $7 billion - and, bless their hearts, if that were fiscally possible that would be marvellous, but obviously, within the financial constraints we're facing, $7 billion was just not on....

I asked them this in our consultative process: whatever the quantum may be, in terms of methodology, is it better to dribble the amount of money out gradually over a period of years, or is it better to try to bring it all up front and do it as much as possible in a one-shot process?

The advice I received was that the up-front one-time payment approach was probably the best way to handle it.

For one thing, that increases the practical value of what you pay out because of the time value of money. If you dribble the payment out gradually over time, of course, the time value of money accrues to the payer. If you pay it all at once, then the time value of money is in the hands of the payee, and the estimates are that that might enhance its value as much as $400 million to $500 million because it's in the hands of the person who's going to receive it rather than being retained by the government and dribbled out gradually.

.0945

I recognize that people can have different points of view on that issue and it depends on your economic analysis, but by and large the consensus I heard on this subject in my consultations was that the up-front approach was probably, all things considered, the best approach.

Regarding your comments about NISA and some of the other safety net programs, in terms of the timeliness of the triggering mechanism and the timeliness of the payments that might be received from those safety nets, in the consultations we're undertaking right now we're looking at that very issue, as to whether or not there can be a kind of interim payment process to get the money into the hands of farmers earlier, when they really need it.

On the freight pooling issue in Manitoba and the eastern part of Saskatchewan, as I said in response to an earlier question, there will be another set of consultations this afternoon with the farm organizations to decide when to proceed. As I've indicated on other occasions, though, a portion of that $300 million WGTA adjustment fund is intended specifically for the purpose of easing the transition from the old pooling regime to the new pooling regime and cushioning some of the extra cost that would be seen in southeastern Saskatchewan, which you represent, and the Dauphin - Swan River area, which Mrs. Cowling represents.

Regarding community pastures, just very briefly on that one, I've heard the suggestion, I'm prepared to think about it, Mr. Collins, but I must say when I compare the quality of PFRA community pasture to almost any other kind of community pasture, I see a big difference in quality, and we wouldn't want to compromise the quality of the federal pasture, because it is the best.

The Chairman: Mr. Calder.

Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Thank you, Mr. Minister, for being here today.

I would like to talk about two things, one as a follow-up on what Mr. Steckle was talking about on the world trade and, in particular, supply management with the GATT. We're looking right now, and I'm kind of in Mr. Easter's field here, into the dairy aspect of it. We're looking at the levy system within dairy being changed into pooling and everything, and I'm curious about that right now, because if we're switching from a levy system into a pooling system within dairy, obviously that tells me one thing - that the levy system is considered blue and the pooling system is considered green. That would be one of the reasons we're doing it and I'd like some of your comments on that.

The other question is on the statement you made a little earlier today that Agriculture is doing its fair share. I can see that, but I also think we're being hit on other fronts, and what I'd like your comment on is that in other departments we're seeing weather stations being cut, in HRD we're seeing the agriculture employment centres being cut. These, for instance, are very crucial to agriculture, and I'm wondering what kind of innovative approach we would have from the Department of Agriculture to make sure these essential services are maintained in some sort for the Department of Agriculture - in particular, the agriculture employment centres, where if Mr. Pillitteri needs pickers for his tender fruit, these people can turn around and get pickers in a couple of hours instead of a couple of days.

Mr. Goodale: On that latter point, Mr. Calder, I thank you for raising it. It's an issue that I have raised with Mr. Axworthy in his responsibilities for HRD, and we're going to be pursuing the issue of how, without additional expense, the various Canada Employment Centres can address the interests and the needs of producers. It's a concern I think we can at least partially address, perhaps not in exactly the same manner as was done under the agricultural employment centres. It is a subject that does concern me. As you point out, having additional farm labour available at certain particular points in the growing season or in the harvest season is especially important.

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One thing you perhaps should know is that the Government of Canada is entering into some international agreements with other countries to facilitate the availability of some offshore labour pools, as that is useful and necessary for the purposes of Canadian agriculture. Those are areas that you and I should probably both pursue with Mr. Axworthy. I think he's very sympathetic to the problem and is willing to work with us toward the right kinds of solutions.

You touched on a number of issues related to the broad question of dairy pricing. There's the issue of the subsidy reduction that's obviously included in the budget. There is the question of to what extent that subsidy reduction might be passed through the pricing system in order to be recouped in other ways through the pricing mechanism. There's the question of the existing formula for cost to production and the status of that formula at the present time. There's also the issue of price pooling that you've referred to, where some provinces have agreed to a certain pooling technique and other provinces have not.

I am anxious to engage all elements in the dairy industry in a discussion of those four issues and perhaps in others that bear upon the question of pricing within the dairy sector. I think what we need to do is arrive at as complete a consensus as we can on all of those issues, in the best interest of the dairy industry overall, ensuring of course that the vital interests of the primary producers are fully respected and taken into account.

There is one thing, Mr. Chairman, that I would take advantage of this question to say. As I came into the room today, I met Mr. Peter Oosterhoff, president of the Dairy Farmers of Canada, who underscored the importance and the urgency of the recent legislation we have proposed with respect to the issue of pooling and amendments to the dairy act. On his behalf I would ask all members to look at that legislation both sympathetically and quickly and to make sure those amendments can clear the parliamentary process before we adjourn in June.

The Chairman: Thank you, Mr. Minister. That legislation hasn't finished second reading yet, so once we get it we will deal with it as quickly as possible.

Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Mr. Minister, it's good to see you here this morning.

I also want to add some of my concerns about the needs of agriculture. Mr. Minister, living and farming in southern Ontario, and especially in the Niagara Peninsula where there's a little bit of tender fruit left in this country which most of us Canadians take for granted, I see that what's coming forward in the WGTA is compensation for the loss of farm value and for the loss of something that has historically been there to compensate the farmers.

Then, Mr. Minister, I see that supply management is gone, and of course we went through tariffication. There is also some protection there.

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In my area, Mr. Minister, the grape industry actually was compensated because of free trade, but for the tender fruit industry, the previous government said they would monitor and see what happened to it. Well, Mr. Minister, in 1989 the free trade came in, and since 1990, which was when it was implemented, over $40 million has been lost in the tender fruit industry and it's going down day by day.

Mr. Minister, last summer I spent some fourteen days with a working group trying to put a package together on how this industry could better be saved. We presented to you, Mr. Minister, and I'm appealing to you now that the wrongs of the previous government could be done well by this government through trying to address some of the issues with this industry before we totally lose it.

Mr. Goodale: Mr. Pillitteri, I appreciate your comments. I especially appreciate the work you have done personally with the tender fruit industry in Ontario. You yourself have made a great contribution to the analysis of the problem and the brainstorming on what kinds of ideas can help address the problem.

The report of the working group has been received by my department and efforts are already under way on most of the recommendations in that working group to address the issues that were raised and to move on a number of the recommendations that were made.

As you might imagine, one of the more difficult recommendations is the suggestion for a specific ad hoc payment of some kind. That one's going to be tougher, I acknowledge that, because there is just not a funding source immediately in place and identifiable to deal with that issue. I will look at it very carefully to see what is possible, although I don't want to raise expectations because that's a tough nut for us to crack.

On other aspects of the committee's report, the ad hoc working group report, it's being looked at very seriously. Implementation efforts are beginning.

In one particular area, the whole issue of the registration of pesticides and the Canadian competitive position vis-à-vis the United States, as you know, we have started the process of implementing the long outstanding recommendations of the Pesticide Review Committee. It's a process of trying to make our Canadian industry more competitive with their American counterparts. We've started the wheels rolling there at long last.

That report has been outstanding for a number of years, and we've made more progress on it in the last eighteen months than had probably been made in the previous two or three years, but we're moving on it and we will try to make some progress there as rapidly as possible to ensure that Canadians can be competitive with their U.S. competition.

The Chairman: Colleagues, unfortunately time has caught up to us, but we do have two more minutes, which gives me an opportunity to ask a couple of questions, Mr. Minister. One of the questions I have came under discussion with the CFA when they were here a couple of days ago.

You've talked about the importance of marketing and getting marketing information and they have suggested to us that in fact a lot of the analytical marketing information we use in the department comes from Americans. In fact, we contract that out or are in the process of contracting that out. Is that true? What is your feeling on that? I think it's called Sparks Companies Inc.

Mr. Goodale: Mr. Chairman, we get market information from every conceivable source we can lay our hands on. We assess its credibility, its authenticity, and try to put it in the hands of Canadian farmers and producers and processors and potential exporters, who can make the most use of it.

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Some of those sources are American, some of them international, some of them Canadian domestic sources. But one of things I referred to perhaps too briefly in my opening remarks was the need for an agrifood trade network that will use all the conventional tools and many of the new tools that will become available to us under the auspices of the new international information highway to make sure as market information, market intelligence, becomes available in our potential marketplaces around the world, we gather that information as quickly as possible, transmit it instantaneously back to Canada, and make it available to the Canadian exporters and potential exporters who can use it and make a sale as a result of it.

Those international marketplaces, especially in the Asia-Pacific region and in Latin America, move very quickly. They change very quickly. A market opportunity that's on the street in Hong Kong this morning will be gone by this time tomorrow. It'll be filled by an Australian or an American or a European, unless we're the first off the mark to get there with our product, with our exporters, with our Canadian full-service approach to trade and marketing, and grab the sales opportunity first.

The agrifood trade network I talked about in my remarks is intended to do that: to help Canadian exporters and potential exporters have instantaneous access to the best market intelligence sources, internationally, worldwide. We will continue to glean that information from every conceivable source we can, so it can be of greatest possible use to Canadians.

The Chairman: About farming, Mr. Minister, in response to a question I believe from Calder on pooling and pricing, you've indicated you're doing some consultation with the dairy industry. When might we see the results of that consultation?

Mr. Goodale: As soon as I'm able to conduct it, Mr. Chairman. At this moment I don't have a firm time line, other than to say I regard it as an urgent matter. I think the dairy industry does as well.

The Chairman: It should impact also on our study of that bill when it comes to us.

Mr. Goodale: Yes.

The Chairman: Colleagues, unfortunately time has caught up to us. We will be having the opportunity of hearing a different assistant deputy minister, unless the minister would like to come back to the committee again.

I'm sure you're always welcome here. We'd like to see you, because as you see, there are always a million questions. Maybe we could have you back here some time in the future to deal with some more of this.

Mr. Hermanson: On a point of order, I wonder if we could request that, because there are so many questions that should be asked of the minister. If we could request that the minister make another appearance to deal with the estimates and before we conclude this process, I think it would be wise.

The Chairman: Mr. Hermanson, what we will do is bring that up in steering committee. If it's the feeling of the steering committee, then what we'll do is -

Mr. Hermanson: If he were willing to come back, we could ask him while he was here.

The Chairman: I'm sure the minister would be willing to come back.

Mr. Goodale: I certainly have no objection, Mr. Chairman. It's only a matter of scheduling. That's sometimes a challenge, but we'll see if we can work it out.

The Chairman: Thank you.

The meeting is adjourned.