[Recorded by Electronic Apparatus]
Tuesday, December 3, 1996
.1105 
[English]
The Chairman: I'd like to call the meeting to order please.
Pursuant to Standing Order 108(2), the natural resources committee is continuing its study on rural development. We're pleased today to have representatives from two departments, the Department of Transport and the Department of Indian Affairs and Northern Development.
Much of the testimony we've heard as a committee from a number of witnesses, both here in Ottawa and from across the country, has dealt with issues that relate to those two departments. We're pleased to have an opportunity to have you in front of the committee today.
I'd ask you both to make an opening statement of around ten minutes. Then we'll turn it over to our members to ask questions. Perhaps we can start with the Department of Transport. Please introduce yourselves, gentlemen, and then proceed.
[Translation]
Mr. André Pageot (Director General, Marine Policy, Department of Transport): Thank you very much, Mr. Chairman.
[English]
My name is André Pageot, I'm director general of the policy and coordination group of Transport. I have experts with me who represent the railway sector, the ports and harbours, as well as the highways.
I understand you are trying to face a very interesting challenge in making sure the country offers proper infrastructure and facilities all around the country. Certainly we would agree with that goal. Transport Canada is a major provider of infrastructure in the country. Over the years, throughout the history of the nation, the quality of transportation services has been very important.
I would bring to your attention that the department has launched a very major reform. To give you an example out of the Transport Canada business plan, the department, which used to have over 19,000 employees in 1984-85, will be down, in a couple of years, to about 4,000 employees.
We have transferred some airports. We have transferred air traffic and navigation of airlines. We have a program to rationalize railways as well as the marine sector and all the sectors of transport.
.1110
To give you an example on the infrastructure, we provide over 83,000 kilometres of rail lines and 900 kilometres of public roads. We have over 600 ports and wharves and 152 airports.
Right now our policy is designed to make sure we focus on essential activities and try to put the users in charge of some of the transportation infrastructure and management. Whether it's for airports or ports and wharves, we are trying to bring the users into the management of the structure. We are trying to make sure we have more local say in the day-to-day management of the infrastructure.
But there is the reality that we have overcapacity in the system. Eighty percent of all the rail traffic is moving on about one third of the rail lines.
In the ports business, we have 80% of the traffic in 30 major ports. We maintain sites where the construction of the highways and the development of new transportation options have at times made the historical facilities obsolete - to have a surplus in terms of requirements.
We have had many airport sites, or ports, where there has been no commercial traffic for many years.
The Chairman: Mr. Bélair.
Mr. Bélair (Cochrane - Superior): On the list of witnesses, we have from the Department of Transport, Mr. Pageot, director general, marine policy. Since you've started your exposé, you've been talking about Transport Canada in general. Is that right?
Mr. Pageot: Yes. I've been asked on behalf of the department to talk about the overview of the Department of Transport, but obviously my specific knowledge will be stronger on the marine side, where I work. Over the years I have assumed different responsibilities in jobs involving -
Mr. Bélair: I'm not questioning that. I thought you were going to focus on marine policy, especially pertaining to small crafts and harbours, as well as the possible new licensing policy.
The Chairman: That's not what our witnesses are here for, Reg. They're here on the issue of -
Mr. Bélair: This is what is misleading then - the marine policy thing.
Mr. Pageot: We will cover the marine policy as a major element, but the department is also involved in railway...and a lot of other activities. You have to be careful, when you talk licensing, not to mix it up with the role of the Department of Fisheries and Oceans.
The Chairman: I would correct that as well. That specific initiative, which used to be in Transport - about a year and a half ago, I guess - was moved over to DFO.
The idea here is to get an overall idea of Transport's initiatives, and in the questioning, if it doesn't come out in the general testimony, we will be pinning you down on rural Canada specifically. I already have three questions, myself, that I hope are addressed.
There was a point of order over here from Mr. Stinson.
Mr. Stinson (Okanagan - Shuswap): No, I think you basically cleared it up. I wanted to make sure we weren't following down the path of licensing for marine, which has nothing to do at all with natural resources.
The Chairman: Okay, please continue.
Mr. Pageot: Thank you, Mr. Chairman.
Maybe that brings us to the point of the rationalization of the department. You are aware that the Canadian Coast Guard, which was operating a very large fleet, has been amalgamated with the Department of Fisheries and Oceans so that there could be economies of scale in civilian fleet operations. A large part of the marine role in terms of search and rescue, pleasure craft, small private ports for marinas, and fisheries wharves and so on belongs to the Department of Fisheries and Oceans.
You understand that I will limit my remarks to commercial wharves and the commercial side of transport.
The point I was making is that in the broad rationalization, we are facing, because of a dynamic evolution in transport and because of a change in global markets, major overcapacity issues, which is evident in some of the small commercial wharves and some of the branch lines.
.1115
We believe that the commercialization thrust we have pursued with the railways is a better way to answer the needs of all Canadians. If you remember, in the United States there was a massive bankruptcy of railways. The damage produced by market failure is a lot more important than the adjustment you do by rationalizing and making choices yourselves.
You have to keep in mind that for most products we carry, and for Canadians who travel, a large part of the cost is also moving to final destination, to a port, to an export to import position. If you have cheaper rates for railways, cheaper rates for trucks, good highways, good ports and efficient facilities, the farmers, the producers in the mines, and everybody living in smaller towns will pay less for transport.
This is very important, because sometimes the danger is to look only at the immediate 25 kilometres next to a municipality. You will realize that when we move grain from a farm to an export point, to a consuming point, you may have 2,000 kilometres of railways. If we have railways that are competitive with the United States, and good trucking systems, the residents of these municipalities will pay less for transportation.
The reform of transport has been very substantive. It has been based on two major aspects, one of which is commercialization. In a more mature system we want the markets to influence decisions a little bit more. We also try to bring the users into the decision-making. This is very true in some of the port divestiture issues.
I've been managing wharves and facilities on the coast of Labrador, for example, and I tell you it is very far away from an office tower in Ottawa. If you want to put a sign up that you want to do a little bit of dredging and you bring local people into the management structure, you will have a lot more efficient results and cheaper services than having everything controlled by five different departments and bureaucracies in Ottawa.
This is one of the major features in our reform, bringing local users, municipalities and people into a partnership in the day-to-day management rather than having a centrally controlled bureaucracy. We believe it is feasible.
We have a program for the transfer of over 300 or 400 wharves around the nation. We already have significant results, with letters of intent at many sites from local groups and users willing to get involved. We have already done some transfer between departments with Fisheries and Oceans. We have 12 sites on the south coast of Newfoundland that have been transferred to the Government of Newfoundland where they would have a better say on the services. We have had seven sites already divested to local interests and 87 letters of intent in terms of the transfer.
In order to make the transfer and the marine site a little bit more efficient, we have put in a transition fund, which will be $125 million, plus we have done many studies on the environment and real estate. This would allow us to facilitate the transfer either by bringing some of the equipment and wharves to good working condition...we may be able to assist the group in the initial stages of the takeover.
At the end of the day you have to keep in mind there will be some rationalizations. We have many wharves that were built before the advent of highways. We have many regions where some of the wharves have become redundant because a lot of activities are taking place on the highways, using trucking or rail. We have sites where my colleague Brian could confirm we haven't seen a commercial ship for many years.
The railway has been a major area for rationalization. As you are aware, we have privatized Canadian National. In order to do that we have modified the National Transportation Act. That will result in quite a few new initiatives in other parts of Canada. For example, we are allowing private groups to run short lines where we have surplus lines from the railways.
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We have defined quite a process whereby branch lines could be abandoned but taken over by more efficient local groups. We are hopeful that in many regions of the country you will be able to maintain more services by local involvement than by keeping a major company carrying the burden of loans and the burden of inefficient lines and facing threats of bankruptcies.
We have a few initiatives. For example, for the northern Manitoba rail line we have a new group called OmniTRAX that has offered to run the rail line. This may facilitate developing the longer-term future of the port of Churchill and so on. In the National Transportation Act we have put provisions that would facilitate access to the various lines.
When you move and you have only a single company, so that nobody is penalized by a monopoly position we will facilitate switching to private lines. We will also have a mechanism to review some of the rates or even arbitrate in some cases.
I should finish my remarks. I apologize if some of you received a copy that was incomplete. We printed the notes back to back so that we wouldn't have as many papers, but only one side has been printed. I hope you will all get the overview notes in a full package.
On the subject of highways, please remember that 90% of all our interprovincial trade is by highways and 75% of Canada-U.S. trade is by highways. This is a major development in Canadian transport, if you look at the last 30 or 40 years.
Out of the spending that a family may spend every year on transportation, the great majority goes for trucking or private cars. So the highway is very important. Transport Canada still invests about $300 million per year in highways, including a lot of federal properties that may be in national parks and other federal roads.
Be aware that the Standing Committee on Transport right now is looking at the adequacy of the surface infrastructure. Mr. Alcock from the Standing Committee on Transport has been on the road and has met Canadians around the nation. He is looking at issues like tourism and highways.
We have reports by the provinces on the need for infrastructure rehabilitation and so on. This is an issue we intend to monitor very carefully. We will focus some efforts on balancing the standards between provinces and between Canada and the United States, but the highway will remain very important for Transport Canada.
If I can conclude, Mr. Chairman, Canada is not only a country for urban residents, whether they live in Halifax, Montreal, Toronto, Vancouver, or any other city, but each town and rural sector of the country is extremely critical in terms of the development of the country, in terms of the future of the country.
We want to make sure in Transport that we continue to give privilege to all Canadians, which is why we have a program for remote sites and why we will make sure we have a competitive transportation system, whether it is regional air carriers....
The best policy is not to freeze development and infrastructure at what it was in the 1960s or 1970s. The best development is to make decisions that require rationalization, which requires making choices of a commercial nature and so on. That way we may be able to reduce transportation costs for everybody, including people who are farmers or who are involved in mining in a remote site.
Cheap transportation will be the best way to keep these communities alive, active, and competitive. In some cases over the years we have made choices. In Newfoundland, where we had an obsolete railway years ago, which had a narrow gauge that was not even of the same standard as the mainland, we selectively invested over $800 million in a highway network, in trucking, and in a bus system. I think it is more efficient to adjust to market forces and make choices of transport based on what is commercially viable than to try to freeze infrastructure the way it may have been in the 1950s.
.1125
Thank you.
The Chairman: Thank you very much.
Before we proceed to questions, I'll ask Indian Affairs to make their presentation as well, and then we can ask questions of either department.
Please proceed.
[Translation]
Mr. Paul Cuillerier (Acting Director General, Lands and Environment Branch, Lands and Trust Services, Department of Indian and Northern Affairs): Thank you, Mr. Chairman, for the opportunity to discuss the contribution of the natural resources sector to the economic development of First Nation communities.
My name is Paul Cuillerier and I am the Acting Director General for the Lands and Environment Branch, and my colleague, to my right, is Peter Wyse, Manager, Natural Resources, Environment and Natural Resources Directorate.
I would like to begin my presentation with a discussion about First Nation communities, about their opportunities in natural resources, about departmental initiatives to support these opportunities, and finally about several successful models for natural resource development. To conclude, I will talk briefly about development in the North.
[English]
In 1995 there were about 593,000 registered Indians in Canada. Of these, about 348,000, or 59%, lived on reserves or in northern settlements. Most of those communities are in rural areas, which are the focus of your investigation.
Committee members should be aware that more than 50% of first nations members living on reserves are under 25 years of age. A young growing population puts added strains on already difficult living conditions on many of these reserves. There is a compelling need to develop first nations economies, and resources sectors are and will continue to be the key to the progress.
Trends are positive. The proportion of first nations youth remaining in school until grade 12 has increased substantially over the past 25 years. Last year 27,000 first nations and Inuit students attended post-secondary institutions, as compared to 5,000 fifteen years ago.
In addition, first nations members in the labour force have increased from under 40% in 1981 to over 46% in 1991. The natural resource sectors are important in reserve communities. In 1991 they accounted directly for approximately 10% of those in the labour force. There were approximately 2,200 Indians in forestry, 1,250 in agriculture, over 500 in mining, and 1,500 in fishing and trapping.
The economic impact of hunting, fishing and trapping is significantly greater than the 1,500 people referenced in labour force statistics. The harvesting of these resources for domestic use remains the most important economic and cultural activity in many remote communities.
In addition to those directly engaged in natural resource sectors, at least some of the 2,300 first nations members in the accommodation, food and beverage sectors were likely to depend on natural resources. Some of the 2,700 first nations members in manufacturing were likely to depend on natural resources in manufacturing inputs.
Clearly, the natural resource sectors account for a significant part of the economic activity in Indian communities. In addition, the natural resource sectors are likely to generate a significant percentage of community exports. These exports are needed to pay for goods and services from outside the community, and contribute to self-sufficiency.
[Translation]
Let me give you an idea of the resource base for reserve communities. There are about 2.7 million hectares of reserve lands, out of which approximately 1.4 million hectares are forested. About 270 First Nations have forest management plans for their forests, and 800,000 hectares have been inventoried.
The overall size of reserve forests seems big, but in most cases, the forests of individual First Nations are too small to be economically viable.
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While reserve forests can provide a base for First Nation members to acquire and develop skills in forestry, true economic viability requires access to off-reserve forests to complement reserve forests.
While a few First Nations have found oil and gas, oil and gas is unlikely to be an economic solution for most First Nations. As for metallic and non-metallic minerals, mining production is known to have occurred on about 150 of the approximately 2,400 reserves. About 550 reserves are considered to have moderate potential for mineral development, and another 132 have good potential.
Nevertheless, only a few First Nations are likely to benefit from a major development in the foreseeable future because the likelihood of a major mine on any parcel of land is relatively small. A few additional reserves are likely to have significant quarrying operations. A larger number will likely be able to meet their needs for sand and gravel from non-reserve resources. Overall, however, reserve minerals will not provide an economic base for most communities.
[English]
I have discussed several natural resources briefly to make the point that while there are on-reserve opportunities, these are limited, and economic progress will depend to a significant degree on off-reserve lands. Most of these lands are under the jurisdiction of provincial and territorial governments.
It is not my place to discuss development opportunities based on provincial jurisdictions. However, I should note that first nations see forest certification processes currently being established across Canada as an opportunity not only to increase their role in off-reserve forests, but also to help protect traditional occupations such as hunting and trapping.
What is DIAND doing to enhance the contribution of natural resource sectors to reserve communities? As a first step, we are carrying out our legal obligations for land and resource management under the Indian Act. We are exploring with first nations various options for Indian self-government. We recognize that many first nations communities can manage their natural resources more effectively than the federal government.
DIAND is engaged in a number of processes that may ultimately increase the amount of reserve land and resources. These processes include treaty land entitlement and the negotiation and implementation of various comprehensive land claims. While they have been initiated to address legal obligations of the Crown, they will benefit first nations communities by expanding their land and resource base.
As well, DIAND provides funding to first nations to negotiate access to off-reserve resources through harvesting contracts, cooperative management arrangements, forest management agreements and the like. As these resources are for the most part under provincial and territorial jurisdiction, DIAND funds first nations to secure technical expertise and other resources necessary to conclude arrangements.
In a similar manner, DIAND provides funding to first nations to negotiate socio-economic development agreements with major project developers. When major developments occur near reserves, they offer potential employment, training and business opportunities to reserve communities and a variety of opportunities to the developer. DIAND funding facilitates the negotiation of mutually beneficial arrangements between first nations and developers. Recent examples include the BHP Diamonds project in the Northwest Territories and Voisey's Bay in Newfoundland.
[Translation]
As I said earlier, forest-based economic development is a significant opportunity for the First Nations. That is why, in April 1996, DIAND and Natural Resources Canada jointly announced the start-up of the First Nation Forestry Program. It is intended to encourage forest-based economic development of reserve communities.
.1135
Funding can be used to enhance First Nation skills and capacity in areas such as woodland activities, forest management and business. It can be used to foster cooperation among First Nation communities. It can also be used to deal with provincial and territorial governments. In some cases, provincial and territorial officials participate in program management committees.
In addition to various programs I have just mentioned, DIAND also provides First Nations with core funding for economic development.
[English]
I would like to conclude my remarks by describing two successful models for resource development in first nations communities. In 1988 the Province of Saskatchewan sold a provincial sawmill to mill employees and the Meadow Lake Tribal Council. Today the tribal council is a significant player in the forest sector.
The Meadow Lake Tribal Council has established a training program, worked with the provincial government to establish fire suppression crews from within its communities, and, in conjunction with its corporate partners, participates in the management of significant forest resources and employs over 125 people in areas such as tree harvesting, log loading and hauling and reforestation.
In the early 1980s, the Province of Saskatchewan insisted that uranium mining companies train and hire people from northern Saskatchewan, where much of the population is aboriginal. Today these mines have over 50% employment from northern Saskatchewan. These examples demonstrate the role that first nations can play in the development of Canada's natural resources.
As I indicated at the outset, I'll speak briefly about natural resource development in the Yukon and Northwest Territories. In the Yukon, mining is by far the most important economic activity. The Faro mine, when operational, will account for between 30% and 40% of non-government GDP. Two recently opened mines will account for an additional 10% of the non-government GDP. In the Northwest Territories, BHP Diamonds will contribute over $6 billion to the Canadian GDP over the next 21 years, providing annual employment to about 300 aboriginal people.
A recent study of natural gas developments in the southern Mackenzie Valley estimates that capital spending could create between 50 and 200 person-years of annual employment in the two territories. This employment is in addition to that of Norman Wells, Canada's fourth largest producing oil field.
Thank you, Mr. Chairman.
The Chairman: Thank you.
We'll begin the questioning with Mr. Deshaies.
[Translation]
Mr. Deshaies (Abitibi): Thank you. My first question is for Mr. Pageot. First of all, I would like to state that regions such as Abitibi, Northern Ontario, etc. need a transportation service of a certain calibre in order to guarantee their development. The railway and the airport are two tools that enabled this development to take place and which should enable such development to be maintained.
However, considering the government policies, people are asking themselves a lot of questions about the future of the railway or the airports. Is your department aware of the fact that it is all well and good to streamline things, but that a certain minimum standard must be maintained so that development may continue?
Mr. Pageot: Yes, absolutely. Obviously, everything ties in to the demand, but a minimum level must obviously be maintained in all regions. Regardless of whether we're talking about ports or the railway, infrastructure is definitely required.
.1140
As far as the highways are concerned, we, in conjunction with the provinces, defined a national infrastructure plan dealing with the main highways and the national issues. My colleague, Mr. Cochrane, who deals with rail transportation, could explain to you that each rail company must present a plan covering the company's essential requirements.
There is quite a process which enables us, when a rail line is declared surplus, to assess, even in terms of the general public, the need for such and such a facility. We also have the ability to intervene in the remote regions.
[English]
It is a question of branch lines. Mr. Cochrane works for the railway branch. We have a process that should ensure participation, not necessarily by a national company but by local groups in actually maintaining some of these things.
Mr. Deshaies: Mr. Cochrane, we have a CFIL in Abitibi. Do you know about the CFIL for the area of Abitibi-Lac Saint-Jean?
Mr. J.E. Cochrane (Chief, Rail Freight, Rail Policy and Program Branch, Department of Transport): Is that not a provincial railway?
Mr. Deshaies: No, it's Canadian National. This part of the Canadian National Railway has been sold to group employees to have a new direction. In the last two years the activity and their services have tripled because the employees have an interest. However, the quality of the rails is very poor, so the speed of the train is around 50 kilometres per hour in some places. Security recently forced the group to change some parts because it was too dangerous for the train. When I spoke to Mr. Pageot, I asked where the mechanism is to check that our minimal services are assured.
Mr. Cochrane: If you're speaking about the safety element, the department is committed to ensuring that railways under federal jurisdiction are operating safely. Short-line railways such as the one you are mentioning are often able to operate more economically. Because labour is shared they can reduce labour costs. Our concern is that over time, money saved there can be invested in maintaining and upgrading the -
Mr. Deshaies: The problem is there.
[Translation]
The problem is that there is indeed an increase in profits in the mining sector and more transportation is provided because the employees are interested in keeping their jobs. However, the profits are not reinvested. There is no five-year plan on the table, for instance, that says: we will provide the line and we will ensure... There are sections between Senneterre and Rouyn- Noranda where we wonder when the train is going to come off the tracks because they're so worn.
There is no plan that states, since everything is going so well, we will take a certain percentage of the profits to gradually improve the rail line so that it can be competitive. The day when the tracks are completely worn out, will the Department say that it doesn't have the money to replace them? At that point, we will turn to the highways, but trucking is not competitive, particularly for the mining industry. The railway network is there for the mining industry. The regions are asking themselves questions. It is all well and good to streamline, but where is the plan that will ensure that the funding will be there in order to maintain the infrastructure?
Mr. Pageot: I must point out that the Department of Transport is getting away from a centralized approach when it comes to planning.
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In the transportation sector, where we now have greater maturity, there is no absolute guarantee that all infrastructures or all equipment will be maintained. We're going to allow market forces to prevail up to a certain point.
Mr. Deshaies: So the message should not be that the service will be maintained coast to coast, but rather that the Department is withdrawing and that it will be up to everyone to manage as best they may. Your message is not clear.
The system is very competitive and business has tripled, but they have inherited a worn out railway system; in certain areas, the tracks are so worn out that trains cannot go faster than 50 kilometres an hour. I agree that we should leave the same system, but perhaps we should get off on the right foot. When the government opts out and the profits don't remain in the region, but head towards the South, it is serious.
You talk about development, but you don't have a plan.
Mr. Pageot: The position...
Mr. Deshaies: You have no policy.
Mr. Pageot: No, the position is more nuanced.
Mr. Deshaies: Oh, yes?
Mr. Pageot: A national system has been maintained in the airports and in the ports. For example, as far as safety is concerned, no compromise is tolerated. Safety regulations are staying.
Mr. Deshaies: And who will pay for them?
Mr. Pageot: In some instances, the State will be paying for the safety roles it plays. In the area of search and rescue, a lot of the equipment belongs to the government, but in most cases, the companies that use this equipment are responsible for ensuring compliance with the standards.
[English]
The Chairman: I'd like this to be the last question and answer. Go ahead and answer that and we'll move on.
Mr. Pageot: This is a fairly broad question that raises the fundamental approach where you try to get some of the market forces and realities in the picture, which means there is a greater reduction in costs and users' participation.
But this is the dilemma. The government does not intend to be a central planner and decide on everything, because that doesn't work. We are trying to lead decision-making, but at the end of the day our hope in the railway networks and everywhere is that you will have cheaper costs for transportation.
When your lumber and products are moved from a small town, 90% of the movement is still on the main line, where it will be a lot cheaper, where the regions will be more competitive and so on. Keep in mind that despite best efforts to keep it as active as we can, there will be areas that may require rationalization.
We may not be able to duplicate transportation modes in every sector if the demand does not have a minimum, so there is no absolute guarantee that everything is maintained.
The Chairman: Mr. Stinson.
Mr. Stinson: My first question will be to Mr. Pageot.
Sometimes I wonder where we're going with regard to this being a natural resource committee.
You mentioned that you were trying to get some of the decision-making down to the grassroots or local level, and I commend you on that. For sure you're going the right way there.
With regard to natural resources, what impact does this have on rail and transportation as a whole? What percentage of rail services is created by natural resources? Do you have any idea? On the trucking end of it, what are we looking at? Is natural resources creating employment for the rail industry or for the transportation industry?
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Mr. Pageot: I don't have firm statistics, but we have about 300 million tonnes of bulk traffic every year moving in our ports and probably about the same or a little bit more in railways. What we are talking about is competitiveness. We spend about $100 billion every year in transportation for this 300 million tonnes.
The mining sector is very sensitive to transportation rates. I heard my colleague talking about some of the low-value commodities, and in the case of coal or sand and gravel, those are very sensitive to transportation costs. In fact, we may not be able to sell mining products outside the country or export some of the coal if we don't reduce costs.
So what we are doing is reducing costs by putting the local people in charge. They will be more efficient. Locally, even if you need to fix something, you already have graders, you already have trucks, you already have equipment. It's a lot faster and cheaper to manage locally.
I can give you examples. We took 18 months to process the acquisition of a crane at the port of Vancouver. If you managed locally with some commercial freedom, you would reduce the time, you would do it cheaper, and so on.
What you will find is that we are reducing the costs and globally keeping the carriers competitive. For example, I'm sure all of you are watching the situation with Canadian Airlines. Keep in mind that we could face the same situation with railways if we don't change anything.
Mr. Stinson: I understand that. You mentioned the Bullet in Newfoundland, and it's still debated back there whether it was a good policy to get rid of the Bullet.
But that's over and done with. What I want to know is how dependent transportation is. How much income or how much employment is created by Natural Resources with regard to transportation?
Mr. Pageot: There is a high dependence. Keep in mind that transportation doesn't exist for itself. We exist because there are goods and people to move. In the jargon we usually talk about ``derived demand''. Nobody maintains transport for the sake of being in the transportation industry. We are there to service customers and to move goods and so on. To answer your question, there is a very high dependence, but it's a chicken and egg situation.
You will also exist in the mining and agricultural sector and all the sectors if you can maintain cheap transportation. We have an example like coal, where you can buy from Japan and you can buy the iron ore from Brazil. You have other producers around the world. In order to keep the level of productivity and the level of activities in mining and agricultural sectors, you need to have that cheap transportation.
Mr. Stinson: So it's safe to say that natural resources creates jobs in transportation. That's the bottom line here.
Mr. Pageot: Absolutely.
Mr. Stinson: Basically that's why I'm here, to try to get that. If you have any of those numbers or any way of getting any of those numbers, I'd appreciate that.
Mr. Pageot: We could certainly try to find out. For example, on rail tonnage, we could certainly find more detailed information for you on the major commodities and so on.
Mr. Stinson: Right.
I know Labrador has been held back basically because of a lack of systems up there for transportation in a number of areas, as well as the north. This will bring Indian Affairs into it a little bit here. I know that in the northern parts of the provinces, lack of roads and ways to get in have created a problem for the Indians on reserves, as well as for exploration in a number of these cases.
You talked about 2.7 million hectares of reserve land. Do you have this broken down by province?
Mr. Cuillerier: Yes, we do.
Mr. Stinson: If I could get that information from you, I would appreciate that.
Mr. Cuillerier: We'll provide that to you, sir.
Mr. Stinson: I'm glad to see that you also put in there the federal jurisdiction end of it.
When I was in Yukon, I did have the chance to travel around to some of these communities and also to a number of properties that were being worked by mining companies. I can honestly say that in every one I saw, there were a number of Indian people at work there, from diamond drillers right on through to cooks. That was great to see.
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When we talk about funding in regard to getting some of these projects up and on line, when these become feasible and the profit starts coming, is there a payback on this money?
Mr. Cuillerier: Yes, there is quite a payback.
We have a program, which I referred to earlier, called the resource access negotiations program. We provide $2.2 million on an annual basis to first nations if they want to get into negotiations for certain activities out there. The negotiations cover negotiation for economic training and distance benefits with major project developers. They cover harvesting and contract opportunities with provincial forestry departments and private industry also. They cover co-management arrangements with provincial natural resource departments, which there are quite a few of out west. And they cover purchase and development of natural resources.
As to the cost ratio of that, for every $1 we put into that program we generate on average about $13. That is a very good payback.
We're very selective. We want to make sure the selection group is very serious and is looking at the good projects. That's why we have an excellent return. It's a very small program - $2.2 million for all first nations across the country - but it has an excellent payback.
Mr. Stinson: Could I get the stats on that too?
Mr. Cuillerier: Definitely, sir.
Mr. Stinson: I would also like to know, if we're getting a payback of 13:1, how come the funding is so low on it. If that's the type of return we're getting from that program, it has to be one of the more beneficial programs the government has ever gotten involved in.
Mr. Cuillerier: I can answer that. The official budget we receive on 1 April is $2.2 million. Because of the excellent return and the public accounts committee and what not, we do usually end up being successful in getting from the department additional funds to put into the program. Last year we ended up with just over $3 million for that particular program.
We'll provide you the statistics from the last few years on those, sir.
Mr. Stinson: Thank you. I would appreciate that.
The Chairman: Thank you, Mr. Stinson.
Mr. Reed.
Mr. Reed (Halton - Peel): Thank you, Mr. Chairman.
Mr. Cochrane, does your policy area cover passenger rail?
Mr. Cochrane: Yes, it does.
Mr. Reed: I received a letter from someone last week concerning VIA Rail and the establishment of a trans-Rocky Mountain run. There's a private company operating a trans-mountain run at the present time. If the letter is accurate, VIA undertook not to enter into competition on that route after they cancelled it, or for a period of time.
Mr. Cochrane: For a period of time, yes.
Mr. Reed: I'm wondering if you could explain exactly what's happening there, because it seems to me a rather untenable situation, where a publicly subsidized company can just enter into competition with private enterprise with impunity.
Mr. Cochrane: I don't have the details of the current situation on that, but I can get the information and get back to you.
Mr. Reed: Could you? I'd appreciate that very much.
The Chairman: If I could interrupt, I'd ask you to formally provide that to the committee and we'll table it.
Mr. Cochrane: Yes, absolutely.
The Chairman: Thank you.
Mr. Reed: I have one question on ports.
There's a federally capitalized harbour on Cockburn Island in Lake Huron. It's an island off the end of Manitoulin Island. There's a radio beacon operating there and so on. The island now has a population of two, and it rises to 100 on the August 1 weekend.
The community is a ghost town, essentially, but it's beautifully maintained, because Cockburn Island exists as a municipality, complete with a clerk and so on, who all live on the mainland.
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For years it was serviced by a ferry that did a route, yet for all those years since, that harbour.... The ferry stopped in the early 1950s, I think, so obviously some basic maintenance has been done to it. What does the government do in a situation like that?
Mr. Pageot: Is that one of yours, Brian?
Mr. Brian Fogarty (Chief, Divestiture Secretariat, Harbours and Ports Directorate, Department of Transport): Transport Canada has no structure on Cockburn Island. For many years it has not been on a list of active sites.
Mr. Reed: So it has been taken off then. It was on and it's been taken off.
Mr. Fogarty: It could belong to the Department of Fisheries and Oceans. They would have most small harbours in Ontario and across Canada.
Mr. Reed: That's fine. Thank you very much for that.
Mr. Pageot: You should be aware that there are over 2,000 small craft-type harbours operated by Fisheries and Oceans, plus the many fishing wharfs. Our colleagues at Fisheries and Oceans also have a program trying to limit...but with many wharfs, when they are built and not in bad condition, it costs virtually nothing to keep them going. We would certainly not rush to change things if the wharf is in good shape and not dangerous.
Mr. Reed: Well, it is.
Does your department have anything to say about the Trans-Canada Highway and its future?
Mr. Brian E. Hicks (Senior Policy Adviser, Highway Engineering and Environment, Highway Policy and Programs, Department of Transport): The Trans-Canada Highway belongs to the provinces. The only sections of the Trans-Canada that belong to the federal government are those that run through the national parks - Banff and Terra Nova. So the only say the federal government has on the Trans-Canada is on those sections that we own and operate in the national parks.
Mr. Reed: So any decision about turning Highway 17 through Ontario into a four-lane highway would be purely provincial?
Mr. Hicks: That is correct.
Mr. Reed: Thank you for that enlightenment.
Mr. Pageot: If I may add, the Standing Committee on Transport has received proposals for the federal government to have more of a say in the infrastructure. The issue is whether the current government will want an infrastructure program, whether it would be broadened, whether it will be different and whether we'll have one at all.
So views may be presented at a standing committee for the current government to have more of a say in funding infrastructure. The way we have done it traditionally is with agreements with provinces, but defining certain criteria. At this point we don't have any such programs, but maybe through the review of the infrastructure needs some recommendations will be made to the government.
Mr. Reed: I have one other question, Mr. Chairman, and that has to do with Indian Affairs. Sometimes having so much of the population under the age of 25 presents a problem, but I think it also presents a tremendous opportunity. You get youthful energy and ingenuity. If you're able to tap that somehow, the future, if properly tapped, may look very bright for the first nations.
What do you do in terms of providing those young people with the tools? What kind of tools do you give them to allow them to make full use of the resources?
Mr. Cuillerier: We have an extensive education program that's provided. We provide funds to ensure that they continue their schooling, and the Indian and Inuit post-secondary education budget has increased from $213 million to $269 million, which is a 26% increase in the last several years. Moneys are directly provided to first nations should they wish to continue their studies.
In many of the areas we're responsible for now, the department is looking to first nations to basically manage those affairs by themselves. That's where we see the focus in working with first nations. It should be more towards capacity building and training, such as in the forestry area.
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If you're properly trained to understand the forestry area and to manage the forest, the forest will probably be in very good shape. That's the angle the department wishes to take. So there is a lot of intensity towards that now. The focus is towards capacity building and training so that they have the capacity, experience and tools to know how to manage their affairs and be successful at it.
Mr. Reed: So this is a fairly fundamental shift in emphasis from what.... What I have perceived in the last 25 or 30 years is that you did make the opportunity available to them to join the white man's world, if you like, to train lawyers and professional people and so on. Many have taken advantage of that, as the statistics clearly show -
Mr. Cuillerier: That's right.
Mr. Reed: - but I guess I'm getting at what you said at the end of your answer. What about the desire and the ability to utilize the resources at hand?
Mr. Cuillerier: The desire is definitely there. We have an extended land management training program for first nations where they start managing land activities on reserve lands by themselves.
From the statistics I gave you in my short speech you can see that the percentage of first nations in post-secondary schooling has increased extensively. So they are getting that experience, they're getting the knowledge, and I think everyone benefits from that within Canada.
Mr. Reed: That trains them to leave the reserve.
Mr. Cuillerier: We hope they come back, but that's their choice. We don't get involved in that.
Mr. Reed: Okay, but I guess I want to be reassured that the opportunity is there for them to train to utilize what they have, and what those resources are in situ if you like.
Mr. Cuillerier: In their communities, definitely. That's the focus for sure.
Mr. Reed: Thank you.
Thank you, Mr. Chairman.
The Chairman: Thank you. Mrs. Cowling.
Mrs. Cowling (Dauphin - Swan River): Thank you, Mr. Chairman. I want to follow up with one of the questions raised by my colleague, and it's with respect to the national highway system.
You indicated that the national highway system falls under provincial jurisdiction. Could you provide this committee with the provincial allocation of those dollars and how those dollars are allocated to the various provinces? I think that would be important for us to know.
Mr. Hicks: Transport Canada has cost-shared agreements with all of the provinces. They vary in length and dollar amounts, but we do have agreements with all provinces.
The agreements are cost-shared, where the province puts up 50%, as does Transport Canada. I can certainly get you a breakdown by province of our current agreements.
Mrs. Cowling: That would be great.
My other question is with respect to the commercialization of the transportation system.
I think we're moving in the right direction for creating a faster, quicker, more efficient and less costly system to move our commodities to export. However, with the geographics of our country and its remote and rural areas, and as we move towards this transition, I think we're running into some stumbling blocks.
I'm going to use an example that is happening in my own riding. We have people who are looking at diversification, at taking those rail corridors and making them into a national cross country trail - whether a walking or riding trail in the summer, or a skidoo trail in the winter - but they're running into stumbling blocks. Perhaps you can help me and our committee.
The stumbling block they have run into is that when they get to the province, there is some holding back from the province to help them through this process of allocating that trail to them. It's gotten to the point where there are people who are actually fencing off portions of that rail corridor.
Is this legally possible? This is happening in my riding. It's a hindrance and a stumbling block for those people. I'd like your comments on that.
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Mr. Cochrane: I believe you're talking about a situation where a rail line has been abandoned.
Mrs. Cowling: That's right.
Mr. Cochrane: If I understand correctly, most railways have agreements with most provinces for the disposal of those lands. I think there is often some concern over whether the land that was formerly a right of way should be maintained as a corridor or revert to the adjacent landowners.
I'm not certain of the arrangement the Province of Manitoba has with the railways, but it's primarily.... I guess the policy issue is whether you maintain the corridor or whether the land reverts to the landowner who may have lost it 80 or 100 years ago when the line was built.
Mrs. Cowling: This is important to the rural people of Manitoba, as they want to move ahead with diversification. Could you find out that information for us and have it available to this committee?
Mr. Cochrane: I'll do my best, yes.
Mrs. Cowling: My other question is with respect to the Province of Saskatchewan insisting that at least 50% of their employees be first nations people. How many of those 50% are women?
Next, one of the things we have heard is that we must maintain and build on an infrastructure to help rural communities become diversified and add value to what they do in their communities. The other factor was the human element, the human infrastructure.
As a committee we have listened to a number of witnesses from those remote areas, and a lot of those people are first nations and have a lot of talent and skills. What are you doing to enhance those skills and build on their human element? How can we make those saleable in the international market?
Mr. Cuillerier: With regard to your first question, the 50% employment - was that for the province or for the regional office of the department?
Mrs. Cowling: You indicated that the uranium mining industry in the province of Saskatchewan -
Mr. Cuillerier: Okay, we'll get back to you on that one. We'll provide that to you, yes.
Mrs. Cowling: Okay.
Mr. Cuillerier: In terms of educational opportunities.... Could you repeat the focus of your question, please? I'm sorry, but I just want to make sure I answer it properly.
Mrs. Cowling: We've talked a lot about infrastructure, but we've also heard a lot about the human infrastructure. Maybe entrepreneurship is what I should be raising. A lot of first nations people have a lot of skills and talents, whether it's making moccasins, painting or whatever that might be. What are you doing as a department to help enhance those skills and bring those to the forefront? I think those are saleable items that we could sell in the international market, and enhance those communities as well.
Mr. Cuillerier: Somewhat related to that, by December 1997 each department is supposed to develop a sustainable development plan. That has a lot to do with the land, the people and how we manage that for the future. Right now we're going through extensive consultations right across the country. In each of the provinces the first nations themselves are actually leading the discussions in their communities on sustainability and how we can ensure that in the future.
There's a very important human element to that, and we are learning. When we talked about traditional ecological knowledge, which is what a lot of people would say is sustainable development in first nations communities - depending on the wording you want to use - there are extensive discussions right now on how the human element can contribute to that.
I believe the different communities are learning from one another, and aboriginals and non-aboriginals too. We also have an economic development program where we annually present $47 million - that's for the 1996-97 budget - to communities out there. On average, if you're looking at over 600 communities, you're looking at about $80,000 per first nation. A lot of that is directed toward the human element, and they make their priorities. They decide how that money should be spent.
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In an awkward way, I'm trying to answer your question. I don't believe I have the full answer to it. We're providing money, we're talking to them, and all communities are learning from each other. We're providing this type of money so the human element can also be developed.
Mrs. Cowling: Good. Thank you.
The Chairman: Mr. Iftody.
Mr. Iftody (Provencher): Paul, I want to ask a question about something that has come to my attention recently with respect to the Inuit, in particular in northern Canada.
Under the rubric of transportation, whether by air, rail or whatever, the Inuit people have a particular and unique set of problems.
Firstly, as you know, their lands are not designated as reserve lands.
Secondly, while they are protected under the Constitution and have the same kinds of rights as first nations people, as we generally describe them, they on the other hand do not enjoy any of the tax benefits of non-payment of taxes on reserve and so forth. In other words, a level of taxation that would be found, for example, in Montreal, Toronto or Vancouver is equally applied in a very unfair way in these northern communities. They also pay provincial sales tax and federal sales tax on all their purchases.
When you pull all of these elements together, the prohibitively high cost of transportation to get a loaf of bread and a quart of milk or snowsuits and skidoo parts up to these areas, in addition to the tax burden they're carrying, is really quite tremendous. When you consider that the average family income - and the larger families have five to seven children - is around $18,000 or $20,000, they seem to be paying almost 60% of their wages towards freight costs and tax costs.
You've been talking about opportunities for economic development. What kind of antidote...? I'll give you a venue to start your response. Would it be perhaps helpful, in terms of economic development for some of these really remote communities, for the provinces and the Government of Canada to consider transportation measures or remedies to help offset some of these tremendous costs, not only for living up there, but for attracting investment as well?
Mr. Peter Wyse (Senior Project Manager, Environment and Natural Resources Directorate, Department of Indian Affairs and Northern Development): I'm not in the best position to answer your questions. I know that for quite a while the department did operate a transportation subsidy program to the northern communities, but I'm not sure of the details of that subsidy program.
Perhaps we could get back to you with some facts about what we are doing in terms of the northern transportation problems.
Mr. Iftody: So you can't comment any further in terms of, say, a general departmental policy on what is really a serious problem for northern people?
Mr. Wyse: I'd prefer to get back to you. I'm not fully aware of the details of what's going on there.
Mr. Iftody: Okay.
Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Iftody.
I have a couple of questions to ask.
First of all, to our witnesses from Transport, I have something to ask that has to do with the issue of commercialization as a government policy. Does the application of the policy of commercialization differ in rural and urban Canada?
Mr. Pageot: Not really. The principle remains the same. We want some market forces to be at play. We want local involvement in decision-making. The exception is probably when we define remote sites for airports and ports. Then there is a special case.
The Chairman: Are the economies and markets of rural Canada and urban Canada different?
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Mr. Pageot: They are different, but not necessarily for the market for your goods. When people travel or send their goods...most goods are not sold to the city or the village next door. They are sold across the nation. They are sold across America. They are sold on world markets. So for most of the goods you sell, whether it's agriculture, mining products, etc., there's no substantive difference between what you may call a rural area and an urban zone, and very often the urban zone is your customer.
The Chairman: I understand that, but you will admit that the economy of rural Canada is very different from the economy of a large metropolitan centre.
Mr. Pageot: Absolutely.
The Chairman: It would seem to me that if you have a broad policy like commercialization, which is one of the issues of this committee, policies such as that have a different application in rural Canada. In my mind there's a very big difference between a commercialization policy applied to Pearson airport and one applied to a remote centre. There is a very big difference between the port of Toronto and the port of Parry Sound, which is a commercial port as well.
Mr. Pageot: Absolutely, but you will find that because of that, our policy will produce more savings in smaller sites. If you pay a federal salary and if you have a project that goes through supply and services, an approval in principle document, and contracts awarding, you will probably have more savings in many of these sites.
The Chairman: I have no argument with that, but as you've said here in your testimony, part of commercialization is that there has to be a market-driven component of it. I guess to a certain extent that's true, but combined with that is that we're the Government of Canada. We're not XYZ Limited. I believe we have an obligation as a government, as a collective group of individuals, to go beyond simple economics. We have a responsibility to ensure that there is a transportation infrastructure that serves rural Canada and that is sufficient to serve rural Canada.
I personally support the commercialization program, but I'm concerned that because we don't apply it with respect to our specific needs in rural Canada, we're going to end up not having that essential infrastructure because we're not going to accept the fact that there's some collective responsibility to go beyond market forces when we're dealing with rural Canada.
Mr. Pageot: Mr. Chairman, these concerns are recognized, and that's why we have put in place transition funds. For example, on the port side we have $125 million because we recognize that we may have to supplement the capacity to raise capital locally. With these funds you will find that it's not necessarily Hamilton and Vancouver and Toronto that will get access to a lot of that money; it will be people in rural Canada. I think it's recognized.
We have many new projects going on, including mining sites in northern Quebec and Labrador. We are working closely to make sure there is proper infrastructure, but we remain confident that we can balance that. How much transition money and how much assistance in a transition is required? At the end of the day we are confident that we will keep essential facilities and we will provide adequate transition funds to make sure it works. But again, at the end of the day, if the deficit of the government is better and we all pay less for borrowing, you are more competitive.
The Chairman: Let me make the question very specific to you. Let's say there is a remote community that is served only by rail and a private entity that has profit as its motivation, as it should have, decides that there is insufficient volume of goods or people to pay for an 800-kilometre stretch of rail to go into that remote community. Let's say there are 1,000 people living there and they choose to live there and they have an economy, although it's not sufficient to support that rail line, and they say, well, from a straight business standpoint we're shutting her down. It makes no sense on a commercial basis.
Do we not have an obligation as a government to ensure the survival of that community, or is the survival of that community solely based on a commercial decision?
Mr. Pageot: It's hard. There is no doubt that we have to be very attentive, and we will continue to be attentive, to all the special cases. To make a general point is difficult.
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We have had cases in northern Quebec, for example, where some of the iron ore mines closed. I think the provincial government even closed a full town. You have to ask yourself where the economic engine is and what's driving the file. Then there is a lot of capacity to offer adjustment or transition.
It's hard to comment as a general point, because there is no doubt that we need to be more efficient in making choices, but we have to make choices, and some rationalization will take place.
If we have people in Newfoundland without their railway lines and still in a growing economy with adequate services, we cannot provide other regions of Canada the same kind of absolute, iron-clad guarantee that everything will be kept and no changes will take place. The nature of our society requires changes and some rationalization.
I cannot make a very general point, except to say I have a lot of sympathy with the point you raise, and every citizen in this country is important. It doesn't matter whether we live in Toronto or in a small town; everybody counts. We will do our utmost to have the proper adjustment mechanism to make it work, but I cannot provide any absolute assurance without having the specific case and finding out whether there's an economic engine someplace.
The Chairman: I suspect that if commercialization were the only criterion, the Canadian Pacific Railroad would never have been built.
To move on - and this is to the Department of Indian Affairs - when we spoke to several witnesses in northern Canada, primarily in the Northwest Territories, they talked about their desire for the devolution of responsibilities for the natural resource sector to the territorial governments. They felt if that occurred they would be better able to manage those resources. They said they would be better able to get economic benefits from the management of those natural resources if they had control locally. What's the Department of Indian Affairs' view on that?
Mr. Cuillerier: It agrees with it. It wants to transfer responsibilities to first nations. It's working actively to work and discuss with first nations.
The Chairman: Is there a timeframe on how long you think it will take to accomplish that?
Mr. Cuillerier: We don't put a timeframe on that. When you work with the aboriginals and the territories, you don't put a time on it. You discuss it together and you set that process together.
The Chairman: This goes beyond just the aboriginal issue. This is your other half, so to speak - the whole management of the natural resources.
Mr. Cuillerier: Yes, that's right.
The Chairman: You're looking at that being delegated as well to the territorial government?
Mr. Cuillerier: That's right.
The Chairman: So you don't have any kind of timeframe on that.
My second question for Indian Affairs is this. In large developments such as Voisey's Bay, as an example, which I am a little more familiar with than the one in the Northwest Territories, do you believe the company - in this case it would be Inco - has a social responsibility when developing that natural resource to ensure that the first nations of Labrador receive an economic benefit of it through jobs, the formation of small businesses, etc.? Do they have that social responsibility, and should the eventual settlement of a land claim include that recognition of a social responsibility, in the department's view?
Mr. Cuillerier: There is definitely a responsibility for major companies coming into areas where there are first nations, to work with first nations and give them all the benefits they should have within that area, be it within their traditional territories or not. Call it a social benefit or not - I'm not sure exactly how we would define that particular term - but yes, definitely. And we have programs to encourage that and we work actively with first nations and the companies to ensure that happens.
The Chairman: So you would see that as an issue for discussion in the settlement of the land claim in Labrador vis-à-vis Voisey's Bay?
Mr. Cuillerier: In terms of land claims, I'm sorry, but that's not my expertise. I hesitate to answer, but I could get an answer to you on that one.
The Chairman: Please do, because that's where the rubber is going to hit the road, when those actual negotiations take place.
Mr. Cuillerier: Yes.
The Chairman: I have one last question for Transport.
The CAA has called for a national highways program paid for by a dedicated fuel tax. What's the department's view on that?
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Mr. Pageot: In Canada, contrary to the United States, we never decided to have a national trust fund. That's probably because of the nature of the federation. In the United States they collect money and put it in a central fund in Washington, and then they decide. In Canada the Minister of Finance collects a fuel tax, and it is the prerogative of the Minister of Finance to decide whether or not he wants to consider new tools for funding.
As a transport official, it's hard for me to comment on whether the fuel tax is a proper way to allocate for highways or not. We collect a fair amount of money from fuel, but the nature of funding and of federal-provincial responsibilities is such that the tax is being used for other reasons.
The Chairman: Thank you very much.
We have one last comment here.
Mr. Cochrane: I'd like to expand a little bit on Mr. Pageot's response on commercialization. In terms of rail, the issue really is that the new National Transportation Act doesn't just allow for a national railway to shut down a line. There's a process in place whereby we encourage the creation of a short line. There are a number of examples of where, even in the short history of the act, lines have been transferred to lower-cost operators. Our hope is that these short lines will be able to operate effectively and will continue to serve the rural areas in which they're located. In the event that there is no commercial operator found, there is an opportunity for both provinces and municipalities, and in some cases the federal government, to purchase the line at net salvage value for whatever purpose.
The Chairman: Again, I thank you, gentlemen.
We stand adjourned until tomorrow at 3:30 p.m.