[Recorded by Electronic Apparatus]
Thursday, May 30, 1996
.0850 
[English]
The Chairman: Thank you. I call the meeting to order and welcome back the minister and the deputy minister.
As you may recall, the last time we attempted to complete the process of the estimates, we were interrupted by... I believe we had a vote in the House that night and unfortunately we were not able to get back to it. So the minister has come back today to complete that now.
If I understand it correctly, we had gone through the presentation and we were in the question-and-answer period. We have a limited amount of time, so I'm going to be rather strict today and I'll tell you what I'm going to do. We're going to do two rounds of ten minutes each. So we'll go to the Bloc for ten minutes, to the Reform for ten minutes, to the Liberals for ten minutes, and then we're going to repeat that for a second time. But that's all the time we have, so I'm going to be very concise on the timing. So I'm going to give you ten minutes, and that includes your preamble. So if you want to spend eight minutes on a preamble, then you have two minutes for the answer.
We'll start it off with Mr. Canuel, and I have 8:54 a.m. on my clock. Mr. Canuel.
[Translation]
Mr. Canuel (Matapédia-Matane): Since my colleague, Mr. Ménard, has very specific questions, I will give him the floor.
Mr. Ménard (Hochelaga-Maisonneuve): I would like to welcome the Minister. I am sure she will not be surprised that I wish to address the issue of Tokamak, which is a very serious problem in Quebec and could have an adverse impact on her career. However, I would like to have a constructive dialogue with the Minister and to clarify certain points.
I will state my four questions so that we can move immediately into a dialogue. I may also table a motion.
The Minister has stated on several occasions that she was giving Quebec 25 per cent of her regional or total budget. That is not clear. In accordance with her oath as a Minister, I would like her to table all studies once and for all at this morning's meeting. We can then reach an agreement on the figures. In terms of the federal structure in Quebec, the Minister knows that the overall situation can be described only as catastrophic.
If the Minister took the trouble to consult a study conducted in 1990 by the Federal Office of Regional Development (Quebec), she would see that $524 million would have to be spent to make up for the shortfall incurred by Quebec in the area of research and development.
.0855
In order to bridge the gap between Quebec and Ontario, the federal government would have to invest $1,105 million over the next few years. That is why the scientific community finds it very difficult to accept the cuts you have imposed somewhat simplistically and even foolhardily. I would ask you to undertake immediately to table the studies in question. You should realize that there is a disparity here that has to be addressed, rather than considering imposing cuts.
Since we are dealing with a partnership project, has the Minister consulted the three major partners involved in funding the Tokamak project in Varennes concerning the Canadian Centre for Magnetic Fusion? Has she had discussions with the Director General? Has she answered his letter?
I would like to very quickly remind the Minister of the four effects of the unilateral withdrawal by the federal government, which were identified in the evaluations: new equipment worth$11 million which was being installed will never be used; 20 years of development, amounting to $70 million, and infrastructure will be completely lost; the loss of hundreds of high-tech jobs in Quebec; far more serious losses in the area of research and development will be incurred by Quebec than by other provinces.
I am ready to table this letter for your own personal information, Mr. Chairman, and for the information of the Committee. Has the Minister answered the letter? Has her department carried out impact studies before making such cuts?
The Minister should come a little more often to Quebec. It is such a beautiful province; should she not consider spending her vacation there?
I hope that we will receive meaningful answers to these two important questions. To date, you have been very pleasant, but you are both pleasant and evasive when we address this issue.
My third observation could be the subject of a motion. Let us assume that the Minister is acting in good faith. In our system, we presume that people are acting in good faith rather than in bad faith. Would the Minister agree to the official opposition tabling a motion which would commit the Minister, her officials and the member for the constituency concerned, Stéphane Bergeron, to finding another means of funding?
If your department is not able to provide the $7.5 million needed to fund the project, another body such as the National Research Council Canada, which has a budget of close to $500 million, or the Natural Sciences and Engineering Research Council of Canada, could perhaps do so.
I would ask the Minister to undertake to work with us; we are ready to do so in good faith. It is not in anyone's interest to allow the debt to climb. It would be a mistake to believe that we will remain silent while you are about to slash a program which is working well.
I know that you are intelligent and acting in good faith. Are you ready to undertake to mobilize your officials, the official opposition, Hydro-Québec and the Quebec government? Three ministers from the Quebec government have made representations to the federal minister; this issue is a major irritant for the Quebec government.
I know that the Quebec government, its officials, the member for Verchères and the people of Varennes want the Minister to undertake to identify another source of funding. I would ask her if we could work together on a duly constituted committee so as to identify another source of funding, provided by an existing body or granting agency.
I have other questions, but I would first like to discuss these issues and given the clear answers we are entitled to receive from the Minister.
The Honourable Anne McLellan (Minister of Natural Resources): Thank you Mr. Ménard.
[English]
I was going to refer to you as my honourable colleague, but -
Mr. Ménard: Yes, I am.
Ms McLellan: You raise a number of important issues. Let me talk about fusion first, and then we can work backwards to look at the more general questions you asked in terms of R and D and the regional R and D budget as spent by my department.
As I've said in the House and as I've said here, unfortunately, because of the situation in which we find ourselves, this is a government that has to make very tough cuts. If you're asking me if we have had to cut programs all over this country - and let me emphasize all over this country - we cut KAON in British Columbia. KAON was absolutely huge in the B.C. scientific community, and the plug was pulled on that. We took a lot of heat in British Columbia because of that.
.0900
[Translation]
Mr. Ménard: But please answer my questions.
[English]
Ms McLellan: What I'm saying is that we had to make very tough choices. In terms of the choice we made regarding fusion, let me remind the hon. member and others that the Canadian taxpayer since 1981 has contributed over $90 million to the Quebec fusion program. We have contributed over $40 million to the Ontario program since 1982. In fact we've been funding the Quebec scientific activity almost two to one in relation to that in the province of Ontario. We have contributed to this scientific endeavour.
You ask whether I will work with those who wish to find alternative funding. Of course I will. In fact I've made it very plain. Keep in mind the legal rights under the contribution agreements. We have the right to disengage from the contribution agreement providing one year's notice. Obviously that was included in the agreement with the expectation and likelihood that at some point the federal government would feel that sufficient contribution had been made, and now if this science were to continue it would have to be picked up by others, especially those who are to gain directly from it - the utilities, Ontario Hydro and Quebec Hydro.
We have exercised our right under the contribution agreement to withdraw. We have one year. We are required by law to provide one year's notice. We have done that. During that one year,Mr. Ménard, let me assure you that I will work with you, and my department will work with others, to attempt to develop alternative funding options. I can assure you they will not come from my department and in all likelihood they will not come from other line federal government departments.
[Translation]
Mr. Ménard: Just a moment please, I want to be sure I understand this. You say that you gave notice; if you would agree, I would like to see the letter. Let's not base this discussion on questions with which we are already familiar; I attend Question Period in the House. You are very eloquent; you are a rising star in the Cabinet. I congratulate you for this. I would like you to table the studies and I would like to know how you intend to help Quebec. My argument is that Quebec does not receive25 per cent of the total; I want to obtain figures and written information from your department.
I am not calling into question your willingness to work with us, but are you ready to undertake to identify the officials in your department who will work with the Canadian Centre for Magnetic Fusion and the member for Verchères in order to find alternative sources? I want something tangible, a clear commitment. Who will you designate? A Deputy Minister or some other official? I want you to give me names, timeframes and commitments.
[English]
Ms McLellan: I have no problem, as I've already indicated, in saying that there are those in my department and I can determine who they will be. I'm not going to do that this morning, but I will give you my personal undertaking that I will identify people in my department who will, over this year period, work with interested parties to see if there are alternative funding sources available.
Let me underscore that it is not going to come from my department because my department is being cut 60% and my workforce is being cut by 30%.
[Translation]
Mr. Ménard: And you allowed that?
[English]
Ms McLellan: It is not going to come from my department. However, I have suggested before in this very setting that the people who stand to benefit from fusion research... It is not basic science, it is applied research with commercial application. If it ever becomes commercially viable, who is going to benefit? It is going to be Quebec Hydro and Ontario Hydro. I would suggest it might be used -
[Translation]
Mr. Ménard: Just a moment please. Mr. Chairman...
[English]
The Chairman: Mr. Ménard, thank you. Your ten minute round is over. Mr. Strahl.
Mr. Strahl (Fraser Valley East): Thank you. I'll try to talk slower and more calmly.
I would like to follow up on this idea of how we can save the most jobs in both the fusion industry and in the more traditional atomic energy side of things. I was pleased to see that AECL has struck a deal on the Whiteshell facilities with the Whiteshell task force. They feel they might be able to save up to 500 jobs at that facility, which is good news.
.0905
I think you, Mr. Axworthy, and the Whiteshell task force were able to put together a deal there, and I think that was good. I have visited the site. I have met with the task force and the mayor and all the rest of it. So I think that's all good news.
I did write to you some time ago to suggest that perhaps, after talking with the task force... They felt that if they had a similar authority to go to the Chalk River plant and investigate alternatives there, then maybe we could save even more jobs by privatizing there. By privatizing at Whiteshell, we've managed to save 500 jobs. Have you considered expanding that task force mandate to go look at Chalk River to see if there are opportunities there for either privatization, some sort of joint ventures, or whatever it might take in order to save even more jobs? I realize you don't have more money, but somehow, as we're going save a lot of jobs in Pinawa, maybe we should be looking at expanding some of that expertise into the other site.
Ms McLellan: Thanks, Mr. Strahl. Let me say first of all that I know the press reports talked about striking a deal in relation to Pinawa and Whiteshell. I want to clarify that. No deal has been struck. In fact the task force will report to me, and now Dr. Gerrard, who is directly responsible for WD, at the end of June.
However, you're quite right to identify the fact that there have been a lot of very fruitful discussions that have gone on there, and we are looking forward to the final recommendations from the task force.
What you see there is the right approach. It is an acknowledgement that things cannot continue the way they are, AECL will have its direct subsidy from the taxpayer of Canada reduced by more than a third, we must all work together to find new ways to reconfigure and transform entities like crown corporations, and if possible we must get the Canadian taxpayer out of their subsidization and get them them operating more like the private sector. If Whiteshell is able to transform itself through the cooperation of the provincial government, the community of Pinawa, AECL, and others, as well as significant private sector investment, so much the better.
I agree with you that it will save jobs and speak to a useful, market-driven future in which there are markets for the research that goes on there, both domestically and internationally. But I can assure you that AECL has no more money to contribute to that facility.
Mr. Strahl: I'm not talking about money; I'm talking about Peter Siemens. When I talked to him, he said that he thinks, if you gave him permission by changing his mandate to go beyond just the Pinawa site, Whiteshell, to include at least a look at possibilities in the rest of the facilities, that there are significant job savings to be had. I'm wondering if you have considered that.
Ms McLellan: Let me say that what we're doing throughout AECL - Chalk River is its largest installation - is constantly assessing new ways of doing business. We are looking at aspects of AECL that can be privatized. It doesn't matter where they are. We are looking at new forms of joint ventures. For example, we are all waiting with expectations for the Donald Macdonald recommendations in terms of what the future will be for Ontario Hydro. I think there could be some natural synergies there that could potentially involve Chalk River.
So if you're asking me whether I specifically authorized Siemens to take a look at Chalk River, no. If you're asking me whether we are constantly, and will continue, seeking to develop new ways of doing business and limit the taxpayers' subsidization of AECL, be it Chalk River or elsewhere, absolutely. We will continue to work with key partners, like Ontario Hydro, the Ontario government, the Manitoba government, and the private sector, to do just that.
Mr. Strahl: After I met with the task force in Manitoba, my impression from talking to them is that there is a lot of expertise and institutional knowledge there now of how AECL and its associates work. My suggestion to you is that if you don't take advantage of that, although you may have other things cooking and bubbling over here, you would lose an opportunity to take advantage of all the investigation and work they have done in understanding the nuclear industry and the potential that could maybe be lost if you don't also turn him loose on the other lab. I'm just suggesting it. Imagine if he and that task force can save 500 out of 700 jobs over here, if that's possible.
Ms McLellan: If it is.
Mr. Strahl: Maybe it is. But to not take advantage of that kind of potential by having that task force, or at least that chairman and some key people, look at the other potential, I think you may be missing a good opportunity.
.0910
Ms McLellan: Yes, I think Mr. Siemens has his task cut out for him in terms of delivering on the Whiteshell mandate. But certainly what I will do, Mr. Strahl, is ask Mr. Morden, who is president of AECL and who is working very closely with Mr. Siemens on the Whiteshell exercise, to take a look at whether some of what, as you rightfully point out, has been learned in terms of Whiteshell could be used in some way to help us achieve greater efficiencies in relation to the Chalk River installation. I will do that.
Mr. Strahl: I am interested in this fusion research issue somewhat too. I know that you mentioned that over the last 15 years, we've had $90 million invested and $40 million, which sounds like a lot, but it is peanuts compared to the overall nuclear budget. The budgets spent in this country building up the nuclear industry is billions and billions over the last 25 years.
So I am interested in the fusion research issue and the possibility that could be sited here in Canada. Before you shut down our contribution to that - I realize that decreasing budgets are a problem and all the rest of it - did you do a study on the cost-benefit analysis of that as far as jobs go? If we had wooed investment from Japan, the U.S. and around the world to Canada, it seemed to me that our investment of a few million dollars would have been multiplied tenfold. That's if we had been the successful bidder. Who knows if we would have done it, but it just seems that there was a huge potential there for both research dollars and outside investment coming into Canada. Did you do some kind of a job study, a cost-benefit study? Because $10 million from Canadian taxpayers is nothing if we've got $100 million from other countries to chip in.
Ms McLellan: What we did look at, Mr. Strahl, was the energy priorities of this country. As you know, we are an energy-rich nation, and fusion is research that is done exclusively to determine whether there is a commercial application to produce a new source of energy in the long term. There are countries that are obviously well placed to be interested in this that have no indigenous domestic sources of energy, or very few. Japan and South Korea come to mind.
In this country, if you look at this nation, it's about priorities, Mr. Strahl. It's about our priorities in the energy sector.
Mr. Strahl: It's about jobs, though, too.
Ms McLellan: It's about priorities, part of which is jobs. Let me tell you, the jobs in this country as they relate to energy, come from hydro, oil, gas, the development of solar and wind energy, the development of natural gas technology, and nuclear generation. That's where the jobs come from. That's where our energy sources are. That's where we have world-acknowledged expertise.
Fusion is a speculative technology. Thirty of forty years from now, we may be able to produce energy from fusion. Nobody knows that now. In fact it may never be a commercially viable technology.
So as a nation, our obligation to Canadians, to the world and to jobs is to do research and put our priorities in those areas where we have natural advantages and where we can market it around the world. I've identified those for you; fusion is not one of them.
That doesn't mean the people who do the research aren't good scientists. I'm not saying that. We have cut programs all over this country in every department where we had good people at work. The difference is that it's not a priority. We have to focus where the jobs are and where our natural advantages are. This government has made it plain throughout; Mr. Martin could not have made it plainer: we are out of the business of business, by and large. Let me say one other thing. He made it even plainer. We're not in the business of megaprojects any more, and ITER would be a megaproject.
However, we made it very plain to the proponents, which include Ontario Hydro and the private sector, that we would not in any way prevent them from doing the necessary preliminary work to determine if it was worth while to put a bid together. If they were able to put together a technical package, a financing package, and make an attractive offer to the international community, we would in fact take a look at that. In all likelihood Mr. Manley and I would be willing to put it forward on behalf of the proponents, but we have made it absolutely plain that this government will not spend the Canadian taxpayers' dollar on another energy megaproject, which in the long run may be highly speculative.
.0915
I can assure you in this case, Mr. Strahl, there's been no decision to even go ahead with the development of ITER. That's still a decision that remains to be made by the international scientific community involved in the research.
We know for a fact that there will probably be a very large bonus, a siting premium, required by other nations, although it's not clear what the Americans' position would be if we were to take a bid and receive a positive indication. What is it going to cost us in terms of cash on the line to get in the door?
We're talking long-term hundreds of millions, if not billions, of dollars. I'm sorry, Mr. Strahl, I'm not going to use the Canadian taxpayers' money in another energy megaproject of that kind.
The Chair: Thank you, Madam Minister, and thank you, Mr. Strahl.
Mr. Wood.
Mr. Wood (Nipissing): Madam Minister, I want to thank you for providing us with a list of the departmental highlights by sector, as was requested the last time you were here.
In the minerals and metals section, your department lists accomplishments, which include the release of several policy and issue papers, the raising of the profile, the mining industry, and a strengthening mining focus at NRCan.
I must say the response from stakeholders in my riding have been very favourable to your efforts, but as I had a quick look through the report, the other accomplishments listed included increased exports, increased foreign investment, and successful trade missions. Again, I have no complaint about that.
I am concerned about what is perceived as only modest growth in the development of domestic mineral deposits. I don't think I saw anything like that, and I constantly hear that the mining equipment manufacturers in my riding are doing the majority of their business out of the country.
Secondly and more importantly, I'm concerned about a lack of secondary manufacturing and value-added products being developed here in Canada. It's great that our exports are up, but can we not do more here at home to develop what we already have? I'm just curious to hear whether this is an areas that your ministry will be looking at more closely in the future.
Ms McLellan: I might call on Mr. Sully, ADM, mining and metals sector, to answer specifically some of the concerns you've raised. Obviously, we are the world's largest exporter of minerals and metals. We're very proud of that fact.
We're always looking for ways to add value here at home, as opposed to simply exporting the raw resource. It's a challenge in our resource sectors. Depending on what you describe as value added, the refining, the smelting obviously take place here in a very significant way.
You may have noticed that my former colleague, the Premier of Newfoundland, Brian Tobin, last week made it very plain that what is taken from Voisey Bay is going to be refined in the province of Newfoundland. This all speaks to value added as opposed to just loading the iron ore or whatever on ships and delivering it to markets such as Thailand for refining, smelting, and ultimate use.
Having said that, there's a tremendous need around the world for minerals. I've seen that most recently in my trip to China, South Korea, and Thailand. If we can export those minerals to those countries to assist them in developing their economies, that creates jobs here, it creates jobs there. It helps us with our positive balance of payments.
At the end of the day we are constantly striving to ensure that there is an ongoing process by which we add value here at home. So I think you need to strike the right balance as it relates to the export of minerals. Some of them will be exported in a fairly raw state. Others will be exported after substantial refining, smelting, processing, or what have you.
.0920
Obviously we export. We make a lot of steel, for example, in this country and export it. At the end of the day, I think we have to do what we can to encourage value added, acknowledging the fact that probably we have to try to achieve some balance.
Ron, do you want to say anything more about this?
Mr. Ron Sully (Assistant Deputy Minister, Mining and Metals Sector, Natural Resources Canada): Thank you, Minister.
I would add for the benefit of the committee that we do have a formal advisory structure set up, which looks at our programming, especially in the science and technology area.
I would mention that in the case of our materials, the advisory committee has certainly encouraged us to devote more attention to the issue of value added. We are reforming our program structure and our project structure to do that. We will be placing more emphasis on it in the future.
On your comment on the question of the reserves situation, I think we do have some good news here. I would undertake to provide you with the detail later, but in the last couple of years we have seen an absolute turnaround in the level of gold reserves in Canada. As you know, not only gold but also basically all the base metals had been declining for some time. In the last couple of years we've seen an absolute turnaround in the level of gold reserves.
Given the Voisey Bay discovery in Labrador and Newfoundland and certain other major discoveries, we think in the next couple of years we may also see a turnaround in some of the principal base metals such as nickel, copper, and cobalt. We are looking at the opening of 24 mines this year and 25 mines next year, across the country. We're expecting a level of exploration this year of $945 million, which is the third highest level of exploration ever.
I've just returned from a major trade show in Chile, where, as you know, there's a lot of that activity. Certainly there's a lot of investment there, but I think the good news for Canada is that the mining industry is healthy enough so that when you have good deposits and the right prices, the capital necessary to develop those deposits will come. What you're seeing right now is a very healthy level of investment in Canada, while you have high levels of investment in South America.
Mr. Wood: Thank you.
In the forestry section, some of the current projects and accomplishments you put in there are the development of new pesticides and work on tree genetics, research, and fire detection and prevention. With the exception of work in sustainable development and softwood lumber agreements, these are the things that the forestry section is doing.
My question, I guess, is this. Is this the type of work we will see out of the new forest service; that is, a focus on research and development issues and knowledge-based projects? Is the majority of the forestry division going to be made up of scientists in labs as opposed to people working with stakeholders in the field?
Ms McLellan: Yes, although when you say stakeholders in the field, it depends on what you mean. I think, in terms of our R and D agenda and our national networks of centres of excellence, laboratories of excellence, we are working with stakeholders in the field. We're working with university researchers, we're working with researchers who worked for major Canadian forestry companies, we're working with provincial governments. This is a key component of our reformulated role for the federal government in forestry.
Yes, you're right: our priority is science and technology, developing the knowledge required to continue to have a sustainable forestry industry in this country. We will continue to do that, and we will do it more and more in partnership with key stakeholders in the private sector, other levels of government, and university and other research institutions. We're all in the business of levering our resources and our limited dollars to get the biggest payback for long-term sustainable forestry. We will work with key stakeholders to achieve that.
Still, our department is about science and technology: 75% of the budget of the department is spent on science and technology.
.0925
Mr. Wood: Does that mean more money or the same amount of money will be going to Forintek and places like that?
Ms McLellan: As you know, our budget has been cut by 60%, so there are going to be reductions. We have already told groups such as Forintek - I have met with them - that our contribution will be reduced, but they are working on a longer-term plan to ensure that what they are doing will continue to be done. They have to refocus; they can't do everything they've done in the past, just as we can't. But I've given them an assurance that we will continue to fund Forintek at a certain level over the next three years and provide them with a planning horizon. They will continue to do the very good work in relation to value added in the forestry sector that they have been doing.
The Chairman: Mr. Canuel.
[Translation]
Mr. Canuel: My colleague has described the Minister as a rising star in the government; he was very generous. I would tend to think that a rising star has certain powers. It is completely unacceptable to state, as you have done on two or three occasions, that you agreed to your department being cut by about 60 per cent.
I am sure that nobody here, not even the members opposite, can understand how such brutal cuts could be made to research and development in forestry, mines and energy. Everyone agrees that the government must make cuts, but it must do so in the right place. These cuts do a tremendous amount of harm, particularly in the area of forestry.
I have always maintained that a job in forestry was less costly because it represented an asset for the government, through the work done and the taxes paid by the people employed in this area.
What will be left if we cut in the area of research and development, if we impose cuts in Varennes? It's impossible to understand why a country which claims to be rich would cut research and development. Madam Minister, you are showing good will; you always answer and I understand your position.
You say that we don't have any money. If that is the case, why could you accept a reduction of 60 per cent? Cuts could have been made elsewhere. I am sure you will agree with me on this. In the summer of 1994, your colleague Paul Martin, who was then responsible for the Federal Office of Regional Development-Quebec, sat at a committee of officials to consult the agencies concerned about the future of the forestry development program of Eastern Quebec.
The mandate of this committee was to redefine the role of the federal government in the region concerned after March 31, 1996, at which time the plan for Eastern Quebec was to be terminated. Insofar as I know, the committee's report was never presented. Could you inform me of at least some of the major conclusions?
[English]
Ms McLellan: Thank you, Mr. Canuel.
Let me say first of all, as I have said here before, as we said in the Speech from the Throne - and I expect those of you who represent the Bloc would be the most sensitive to this - we acknowledge the primary but not exclusive jurisdiction of the provinces over forestry and mining. Generally, these are resources owned by the provinces in trust for the people of their provinces.
[Translation]
Mr. Canuel: I'm talking about the committee.
[English]
Ms McLellan: As that is the case, it seemed to us that when you're making choices about downsizing government and where to cut... And I agree with you, cuts always hurt; nobody is saying they don't. But where you are attempting to priorize across government and difficult choices have to be made, we have to define what core federal responsibilities are, and the primary responsibility for the resource sectors, mining and forestry, resides with the provinces. They will therefore have the bulk of the responsibility for the management of those resources.
However, there is a national role, and this comes to your other point about research and development -
[Translation]
Mr. Canuel: I'm asking you for the findings of the committee which you set up. We have never received them.
.0930
[English]
Ms McLellan: You're referring to a committee established by my colleague Paul Martin, under FORD-Q.
[Translation]
Mr. Canuel: In the summer of 1994, your department and Mr. Martin's department set up a committee to consult people in Eastern Quebec with a view to determining what the federal government could do after March 31, 1996. Although the study was carried out, we never received the results. I would ask you to inform us of some of the findings.
[English]
Ms McLellan: My deputy minister will comment to some extent on the report, but I personally will undertake to find out the status of that report at this point and see what can be shared with you or with the woodlot owners in eastern Quebec.
Ms Jean C. McCloskey (Deputy Minister, Natural Resources Canada): Thank you, Minister.
Mr. Canuel, when you asked the question I could not recollect a report, so I referred to my colleague. I believe there was not a formal report tendered. There was some work done cooperatively in committee, and suggestions were made with respect to how FORD-Q might redefine its lines of business in the forestry area. There was some discussion on how technology developed in various places, including in our own laboratories, could be used more effectively by local organizations to continue the work they're doing in silviculture and other areas.
[Translation]
Mr. Canuel: If I understand correctly, a committee was formed and departmental money spent, but we will never have any conclusions. There must be some results which should be made public; our committee, particularly, should be informed of the results.
[English]
Ms McLellan: Mr. Canuel, I will take this up with my colleague the Minister of Finance, who was the minister responsible for FORD-Q at the time. I will undertake to get back to you and the committee about the work that was done and the recommendations, if any, that were forthcoming from the work that was done.
The Chairman: Mr. Strahl.
Mr. Strahl: Thank you, Mr. Chairman.
Minister, it says here you are an active and engaged minister - and very engaging, as well, I may add.
Ms McLellan: Those aren't my words, Mr. Strahl.
Mr. Strahl: I know, but it's a good little title for a paragraph.
I do have some questions for you. Although you're active and engaged, and engaging, from looking at some of the deadlines that you and your other ministers have imposed upon yourselves, and these deadlines have come and gone... I'd like you to address them if you would.
We passed in the House of Commons an internal trade agreement that does not have an energy chapter in it - something that you're involved in. The energy chapter was promised almost a year ago. The time has come and gone, and we passed that bill, I think incredibly, without having an energy chapter in it. I just wonder whether you could bring us up to date on where it is. As I say, it has been promised and that deadline has come and gone.
Another deadline was Mr. Manley's promise on regulatory reform on mining issues. That was promised for last December. It has come and gone and has gone by the wayside.
Although you're active and engaged, the mining industry has started to squawk, as you will know from the clippings. Although they appreciate the rhetoric, they are looking for some action. These deadlines you have put on yourself and your fellow ministers are coming and going and we're not seeing the finished results.
There's almost nothing in the estimates about regulatory reform and so on. It's an ongoing process somewhere, but it hasn't translated into a lot of results. The energy chapter and Mr. Manley's promise are two specific things on which deadlines have come and gone, and I wonder what the status is on those things.
Ms McLellan: You raise very legitimate questions.
In relation to the energy chapter of the internal trade agreement, we continue to work with the provinces. There is a working group. And as you know, Mr. Strahl, this is not something the federal government can impose. Large parts of what we're dealing with here are provincial jurisdiction. Therefore, we are working as hard as we can with the provinces to try to achieve a level of agreement and consensus among the provinces. It's not us, it's the provinces who still have some substantial disagreement.
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It relates to the energy chapter. The key problem continues to be, and I think I've mentioned this before, the whole question of electricity transmission, the whole question of moving electricity across provincial boundaries, through provincial systems, into other markets and jurisdictions. This is a very difficult issue for certain provinces. It appears to be a very difficult issue for the Province of Quebec.
Mr. Strahl: And for the Province of Newfoundland, which is looking to access those lines.
Ms McLellan: That's right. It's a very difficult issue for Newfoundland. There appears to still be considerable disagreement of approach between the provinces of Newfoundland and Quebec as it relates to long-term restructuring of the electricity markets to reel electricity from Newfoundland, say, down to markets in the northeastern United States. This would have to be done through Quebec.
We continue to work. Alberta chairs the working group. They are very supportive of moving to a much more market-based system. There are other provinces that share their orientation; then there are provinces that aren't quite there yet.
It's not a simple equation. Provinces have spent a lot of money developing the infrastructure to deliver electricity to market. I think the whole question of stranded assets becomes a concern for provinces and for provincial taxpayers. We have a mix of privately owned companies in this country and big public utilities such as Ontario Hydro and Hydro-Québec. At this point it's not clear what the future structure of Ontario Hydro will be, so our colleagues in the provincial government of Ontario have asked us and their fellow provinces to give them a little time to sort out where they would like to go with the long-term structuring of Ontario Hydro.
All these things have led to a situation in which the discussions are ongoing. The working group continues to work, but this is not an area where we can impose an outcome as it relates to electricity transmission. Therefore, we are committed to continue to work on a cooperative basis with the provinces.
Mr. Strahl: Isn't it true, though, that the federal government under the Constitution does have some powers in the restriction of interprovincial trade? I think from Newfoundland's point of view especially...because as near as I can detect that seems to be the big bone of contention. They want the right to wield power through Quebec to sell to the southern markets. The federal government does have the right to strike down interprovincial trade barriers, and I think it's a trade barrier if they're not allowed to wield power through another province.
Is the federal government aggressively taking a stand? Do you just say, come on, guys agree, or doesn't the federal government take an aggressive stand to say Newfoundland deserves the right to wield power, they want to develop the lower Churchill in years to come or whenever it might be, so let's give it to them? Doesn't the federal government take a pro-active stance on this?
Ms McLellan: We have taken a pro-active role in terms of trying to help the provinces understand what the future of the electricity market is likely to be in North America. We have tried to share with them the fact that right now we have an excess of power, right now we may have a competitive advantage over key American producers of power.
Unless we restructure our electricity markets the way the United States is going to, and has already begun to, we will lose that competitive advantage and will not develop new competitive opportunities. I can assure you the United States is going to come and start demanding the right to wield their power in this country, and they will then start to compete in Montreal and in Toronto directly for consumers in those provinces. They will try to undercut the big public utilities or private sector utilities in this country.
What we try to do is help people understand what the future will be unless we restructure our markets and understand that power at the end of the day has to be treated like any other commodity. If it isn't treated that way, it seems to me in the long run we are going to lose the competitive advantage we have in this country presently.
Mr. Strahl: In June we have this first ministers conference to deal with constitutional issues and issues that I hope will be the plan A of national unity - in other words, finding ways to make the federation work better. I hope that's the Prime Minister's plan and so on.
Ms McLellan: Yes, absolutely.
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Mr. Strahl: Are things like the internal trade agreement, the energy chapter and things like regulatory reform in mining industries, and so on, going to be on the table in June, or are we going to be talking esoteric stuff that I don't think is going to solve the problem? Are we going to deal with this stuff soon? Is there no deadline or nothing we can do to bring this to a conclusion?
I'm concerned that this is just going to go on until people start saying that the federation doesn't work. We have to find a way of saying it does work, doggone it, and the federal government's going to make sure that interprovincial trade barriers are not greater than international trade barriers. Surely we can do that.
Ms McLellan: I'll tell you what my advice to the Prime Minister's advisers will be in relation to the energy chapter. My advice will be that he and the premiers should talk about this. I would seek some consensus from the premiers and the Prime Minister that the conclusion of the energy chapter is a priority and that they send their provincial negotiators and the Prime Minister send federal negotiators back to the drawing board to deliver on this within a set timeframe.
We have to get the political commitment from the provincial premiers, and in our case from the Prime Minister obviously, but I can assure you that commitment is already there. We need to get that momentum where the premiers are telling their people that they have just got to sit down and deal with the reality of energy in this country, especially as it relates to electricity markets, and if we don't, we're just going to shoot ourselves in the head in the long run.
I certainly will be hoping we all get that guidance and the working committee gets that guidance coming out of the first ministers conference.
We will continue to work with our provincial counterparts to make them aware of the fact that while they may have a competitive advantage right now over American producers of power, five years down the road that may not be the case. And if they don't restructure their markets and if they don't abolish internal trade barriers to the wielding of electricity, then it seems to me the writing on the wall is pretty clear.
Mr. Strahl: The other thing I mentioned was Mr. Manley's promise of regulatory reform on mining. This is another contentious issue. As you've previously mentioned, that is largely a provincial jurisdiction but not exclusively. Mr. Manley said some time ago that he would deliver on regulatory reform. I don't know what colour of book it was.
Ms McLellan: Orange.
Mr. Strahl: It was an orange book. There are many different colours.
What's the status of the regulatory reform, and is that also the kind of thing we're going to be discussing in June? I'm trying to think of practical ways to make things work better so that people, both in Quebec and all of Canada, see that Canada does work well and that we can divvy things up properly and we're not just going to set deadlines.
The Chairman: Please give a brief reply, Madam minister.
Ms McLellan: Our regulatory reform work is ongoing. In fact we've had some notable achievements. For example, in relation to clarification as it relates to freshwater fish habitat, the Department of Fisheries and Oceans is doing some important work there. There are going to be some changes made in terms of jurisdiction over freshwater fish habitat and delegation of certain jurisdictions to the provinces in relation to certain projects.
The whole question of environmental harmonization, the assessment process and how we harmonize it, has a lot to do with the regulatory reform agenda, not only as it relates to mining but other sectors of the Canadian economy. That is all moving ahead. I can assure you that issues like harmonization of environmental assessment processes will be part of the first ministers discussion in June.
I am hopeful. I know this has been a frustrating process. It's been a long-term process; it's an evolutionary process. We'll never be through regulatory reform because the standards will constantly be changing, and processes can always be streamlined and revisited in terms of what works and what doesn't.
We have the new CEAA legislation. We've got a year's worth of activity experience under our belts there. I can assure you there will be proposed changes to CEAA based on some of the things we're already seeing. It's an ongoing process, but I can assure you the political commitment on my part remains strong, as well as on the part of Marcel Massé and John Manley, and we're going to continue to work with our colleagues in other departments to move this forward.
The Chairman: Mr. Thalheimer.
Mr. Thalheimer (Timmins - Chapleau): You answered part of my prior questions on regulatory reform. We know there's a lot of activity right now in exploration. There are a number of reasons for that, of course, such as the metal price increase, and so on. When we refer, for example to Voisey Bay, I don't know that governments can take any credit for that. I think that was a quick look out the window of an aircraft by two very good prospectors. I don't know of any governments that had anything to do up there in terms of finding that mine.
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Regulatory reform is something everyone is telling us today is the big problem as they go out exploring for these mines. I note that we haven't had a response yet to the interim report on the Standing Committee on Natural Resources on this regulatory form. Surely this is something that would not cost government anything if we could get our acts together and get on with this thing. I know you've just mentioned this is an ongoing process, but this is something that would cost us nothing if we could get that together and it would perhaps save the industry millions and hundreds of millions of dollars.
My concern with the slow progress or lack of progress is that it appears we're not going anywhere with this. I'm constantly getting complaints about all the regulations of these various departments. Is there anything we can do, that you could do, to expedite the regulatory reform? I want to stress that it is so crucial to the industry today.
Ms McLellan: I couldn't agree with you more, Mr. Thalheimer, that this is a very important issue for the industry. I think it's an important issue for the government, not only the federal but provincial governments, in terms of working together to deal with some of the regulatory underbrush. You certainly don't have to convince me of the importance of regulatory reform.
In the Department of Natural Resources, we serve as a facilitator and a coordinator in terms of working with some of the departments that have triggers under for example CEAA, but primary departments would be the Department of Fisheries and Oceans, the Department of the Environment, and to a lesser extent the Department of Transport.
There are changes that are happening, but I am the first to concede they are slow, they are incremental. But we've made some significant progress in relation to freshwater fish habitat. I am convinced that we are going to make significant progress in relation to the overall harmonization of the environmental assessment processes.
My colleague Sergio Marchi begins federal-provincial meetings tomorrow with his colleagues at the provincial level. We know that the premiers will address this issue at the first ministers conference. There are things that are happening both within the federal government departments and between federal and provincial governments to move this forward.
Is it ever fast enough for the private sector? No, probably not, but government has a public interest. We have to balance many competing concerns to ensure that when we streamline regulatory requirements we are not sacrificing health standards, safety standards, and environmental standards in terms of long-term sustainability. It's a delicate process; it's an important one. We're moving it forward.
I do apologize to the committee for the fact that we've had to seek an extension in terms of responding to the interim report. My colleagues and I discussed that and we decided that rather than provide you with a fairly brief and cursory interim report we would prefer to go back and take some time and try to develop a more fulsome response and the kind of response the committee deserves in terms of the good work it has done to date. Of course we look forward to the final report, whereupon the government will provide a full and detailed response to the recommendations you develop.
Mr. Thalheimer, as I say, you don't have to convince me of the importance of regulatory reform. I believe we are making progress within the federal government, but we have to continue to push this. I think my colleague Marcel Massé, as President of the Treasury Board, will very soon be developing a framework in which the whole regulatory reform agenda will move forward, not only in the mining sector but also the other five areas identified in John Manley's orange report.
In part we're doing this to make sure the federal system is fully engaged and we've got some momentum behind the regulatory reform agenda, because you are dead right, at the end of the day we're costing industry hundreds of millions of dollars in terms of unnecessary regulations and hoops people have to go through. But let me underscore that this has nothing to do with standards. In fact industry tells us they can meet the highest standards in the world. It's a case of getting the regulatory regime clarified.
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Mr. Thalheimer: I guess the answer I'm looking for, Ms Minister, is whether the federal government is taking the initiative to -
Ms McLellan: Yes.
Mr. Thalheimer: I get complaints especially for answers in my area. You've got the federal government involved. You've got the provincial governments involved. You've got the municipal governments involved. There are mines right in the municipality. They are so frustrated with all these departments.
Is your department taking the initiative to try to consolidate all these three levels of government, or the regulations of the three levels of government, so that we have one window, one place to go, to say here's what's required from a prospector?
Ms McLellan: Certainly within the federal government we are taking a leadership role in terms of working with other key departments to try, at least at the federal level, to bring some rationality to the processes and objectives of various departments.
We are also working closely, as it relates to the mining sector, with our provincial colleagues. Municipalities are a creature of the provinces; therefore, it would be more appropriate for the provinces to directly engage the municipalities they have created and empowered in terms of harmonization between provincial and municipal land use by-laws, or whatever the case may be.
Having said that, yes, we remain interested in working with all levels of government, the private sector, and NGOs to attempt to create the best regulatory system possible to protect all the values reflected in the public interest, but in a way that is efficient and timely.
I am not going to tell you that this is easy. This is a huge federal-provincial initiative. Once you involve yourself in those kinds of discussions, different provinces have different orientations and priorities, and this is a long-term initiative. But certainly within the federal government we want to move this faster than we have and achieve more than we've been able to achieve to date.
Mr. Thalheimer: Thank you.
The Chairman: Thank you, Madam Minister. We appreciate your time. This completes our third meeting on the estimates and ends the committee's examination.
Ms McLellan: As always, Mr. Chairman, it's a pleasure to be here and chat with my colleagues. I thank you all for your commitment to the natural resource sectors. I would encourage all of you to keep talking to your caucus members about the importance of natural resources in the Canadian economy. We all need your help.
The Chairman: Thank you.
The meeting is adjourned.