[Recorded by Electronic Apparatus]

Tuesday, June 11, 1996

.0834

[English]

The Chairman: I'd like to call this meeting to order and to thank everybody for changing their schedules on short order.

As you know, we have a distinguished visitor in Parliament today. The President of Mexico will be addressing members a little after 10 a.m. As a result, we had to move the meeting up.

.0835

We are continuing today with more witnesses on our rural development and natural resources study. I'm pleased to say we have today three groups. I welcome Bryan Curtis from the Canadian Energy Pipeline Association; John Melicher from the Rural Education and Development Association; and Doug Hull and Wayne Tosh from the Department of Industry.

Gentlemen, the way we've been operating is that we're first hearing presentations from all of the groups and then turning it over to members to have a round table discussion.

Industry Canada, perhaps you could go first.

Mr. Doug Hull (Director General, Science Promotion and Academic Affairs, Department of Industry): Thank you, Mr. Chairman. I have with me today Wayne Tosh, director of the community access program; and Sandra Rosano and Terry Moorby, who are going to help with the presentation. They also work on the community access program.

The purpose of the community access program, as part of the government's building a more innovative economy agenda, is to bring rural communities onto the information highway more quickly than would otherwise be the case. As you can appreciate, when the telecommunications industry, which makes Canada very competitive, rolls out across the country it primarily is aimed at servicing the built-up urban areas. However, the rural areas also need this kind of technology if they're to be competitive, to maintain creative new firms that are able to spring up on the information highway and to employ the youth of the community, which of course is the lifeblood of the future development of those towns.

So the aim of the community access program is to bring rural communities onto the information highway more quickly than they otherwise would if there was no intervention in the system. It's a very interesting program. It's well received by the clientele. It's only been operating for one complete program cycle. It's just now going into its second phase. We're expecting a very substantial community response to this opportunity, as we had in the first year.

In your folders today there is background material on the community access program, along with the slide deck I'm going to speak to, which is the presentation.

The community access program - and I'm just going into some of the details on the first slide - was launched in 1995 with the aim of linking 1,000 rural communities on the information highway by 1998. The program was spread over a three-year time period. In the recent budget and throne speech the government announced it was going to increase the program to 1,500 sites over the same time period.

The communities are selected through a competitive selection process, a two-tiered process, which I'll go into in a moment. We deal with communities of 50,000 and less, so it's aimed at being a small town, rural and remote communities program.

The purpose of this program is to stimulate jobs and growth. There's only one bottom line in this program, and that's to generate jobs. How it's done, we'll talk about in a second.

We do provide funding support of up to $30,000 through this competition. However, the average pay-out in the first round was $18,000. So that's a maximum now.

Next is the approval and selection process. Communities apply and are rated on five factors that have to do with their need for this type of funding assistance to get connected to the information highway, the sustainability of the site once it's created, the organization of the site, and the kind of contributions the community is making to bringing their town onto the information highway.

About the way this is done, by the way, what we're really doing is creating a critical mass in a community. One of the reasons the other telecommunications companies don't go to small towns is because they don't think there's any market there.

So the community access program finds a site - which the community in fact finds - and finds volunteers to train other people in the community, people who know a little bit about how to log on to the information highway. They train their fellow neighbours and townspeople about the information highway and how to get on it, using support materials we provide. That creates a critical mass of consumers. Now somebody comes in and services the market.

.0840

We have a number of examples of where that's already taken place. It doesn't necessarily have to be a telephone company that comes to town to operate an Internet service. It might be a small entrepreneur that just opens up and realizes there are 200 potential accounts sitting on his doorstep. He may have trained half of them, and he knows he can offer that service.

It's a very low-cost system to be in, to actually set up an Internet service, or to become an Internet service provider. It doesn't cost an arm and a leg. It's the type of thing where a small business person can get in and service an immediate need. As soon as that happens, he buys a big line from a telephone company and starts parcelling out little lines to everybody else. It becomes a very inexpensive way to get an Internet connection started in your town.

So this is the process by which the towns are selected. They apply. There's a two-tiered system. A provincial selection committee basically makes all the decisions about which town should be receiving support and which shouldn't. Then a national committee attests to the fact that the selection process was fair and reasonable and open, and provides policy guidance on how the program should be improved in the future years.

The next slides show the sorts of numbers we had in the first year. About 770 applicants applied; 400 were recommended by the provincial and national committees and 271 were funded. We didn't have enough funding support for all towns. Then we added another 95 sites during the course of the year as we found some additional funding. We received a fairly substantial gift from Stentor telephone companies to allow us to link towns by satellite. That's one of the reasons we were able to bring on those additional towns.

What's the purpose of this program besides changing the economics? It's meant to really help towns get onto the information highway quickly. The next slide raises a couple of points here.

We want business people to be able to find resources on the information highway. There are powerful business and social services available electronically now that towns can exploit and use if they know the information is there. As well - and we'll show you a few Web pages - businesses are now able to get up on the information highway, put up a Web page, describe their services and conduct business electronically with distant markets. So in fact it's possible for entrepreneurs and small towns across Canada to really be into the global marketplace with their products.

These are most suitable for certain products. If you're in the software business, for example, it's relatively easy to export electronically. If you're in the tourism industry, you can attract people to come to your establishment who otherwise might not even hear about you. You can do so while they're down in California, planning their Canadian visits.

You don't have to be out there with expensive marketing agents, doing a lot of advertising. This is the cheap person's way to do business globally. There are 50,000 firms in Canada we're trying to get onto the information highway and into global trading. This is the way a lot of rural communities will be able to do it.

Besides just getting linked and getting a home page, etc., there's a whole support service, called CNet, the electronic mechanism behind the community access program. It provides training materials, on-line support and a whole bunch of different services we can deliver electronically to communities that are linked.

The service is growing very rapidly. One of the new additions, for example, is an investment profile on every community so that when foreign investors are looking for places to invest in Canada, they can find out about small rural communities as well as large urban centres, which have other ways of reaching those markets.

We invite you to take a look at the home page site; the address is there. This is what the home page looks like. You can click on this and it will go to any province. What you'll see in the next slide is a picture of Newfoundland, which is what you get when you click ``Newfoundland''. The numbers indicate the communities that are already on the community access program in Newfoundland, and where they're located. Then you can go into each one of those pages.

This is the home page for the community of Bay Roberts. If we were able to scroll this down you would find out a lot more about Bay Roberts - the kinds of services they offer and so on. Anything Bay Roberts wants to tell the world about Bay Roberts, they can, through this mechanism. They can also of course find out about all the other things other community access towns are developing. They can learn from each other. They can also access some very powerful services, such as Strategis, our department's on-line business service system, etc.

The next slide is the home page for a company called Netreach, which is in Picton, one of the community access towns. In fact, it was the launch site for the program. This is an entrepreneur who came into town and did exactly what I've just described: helped train people, created an Internet service business himself and went on to service the accounts in the area and to provide on-line services of various sorts - not just linking but support services as well. When we visited this entrepreneur, he had himself and one other man. A year later I think he was up to five or six people in his shop. That's not bad growth for one small company in a year.

.0845

The next two slides are on a new community access site that just came up in the last couple of days. These are the kinds of services available bilingually in Brome - Missisquoi. This slide shows how the program works to some extent. There are eleven sites connected to this community access site in Brome - Missisquoi and they all form a network within the region. I think seven of the eleven sites are active now.

This becomes a very inexpensive way to reach a lot of rural communities with all sorts of different services: government services, federal and provincial, business services and services from the non-profit sector.

The next slide shows a town in Manitoba, Steinbach, and the next slide shows you their Mennonite heritage village, a significant tourist attraction in town. This allows people who have an interest in this culture or in tourism in southern Manitoba to plan their trips, find out a little more about the town, and possibly even book bed and breakfasts and things of that sort.

The next slide is Rankin Inlet, one of our farthest north community access sites. Here not only have the townspeople got together to put the CAP site in place, but students have been used to train the town and keep the service going on a continuing basis. One of the Internet service providers is actually in there helping to establish the site and maintain it and employ some of the students. So this one is actually getting significant private support.

The next three slides, which I won't go into total detail on, represent some of the success stories. The first one I'll talk about.

As this community access site was being put up in Yarmouth, Nova Scotia, which is now an Internet mall for the town, they actually conducted business with Germany and California on shipbuilding and made some commercial transactions before the site was even finally established. This shows that if we put this kind of tool in the hands of towns and entrepreneurs in those towns, they can begin to build more commercial activity for their towns, which of course ends up in jobs and growth for those communities and more employment, particularly for the youth population.

Campobello, New Brunswick, is another small town that set up a CAP site, using the Internet to effectively describe its tourism assets to the world, and it has significant ones. The small town of Gagetown with 300 people was the initial launch for this program, but before six months was finished, half the adult population in town had been trained by their neighbours. They've gone on to do...there are translators coming on-line offering services, etc. It makes a huge difference to a town of 300 people.

Finally, this is an example of one of the projects we're putting into Gagetown. We have another parallel program called the digitization project, where we're taking dollops of Canadian culture and having students digitize them using the facilities available within the community access sites. At relatively low cost - practically no cost - they're bringing important pieces of Canadian culture, literature, science activities and all sorts of things onto the information highway. We can then share these resources back and forth across Canada. Literally every town in the country has important national assets. We want to help them use these vehicles to bring those assets to the attention of other Canadians.

That's the community access program. I gather we'll take questions after the other presentations.

The Chairman: Yes. Thank you very much. We appreciate that.

Mr. Curtis, would you like to go next?

Mr. Bryan Curtis (Vice-President, Regulation and Policy, Canadian Energy Pipeline Association): Thank you, Mr. Chairman. The Canadian Energy Pipeline Association would like to thank the standing committee for the opportunity to speak to you today about the Canadian transmission pipeline and the contribution our industry has made to rural Canada.

.0850

Last week, Mr. Chairman, I think you heard from a couple of our sister associations, like the Canadian Association of Petroleum Producers, that look after what we call the upstream. But it's the producing area; they get the oil or gas out of the ground.

You also heard from the Canadian Gas Association, the association that represents companies that distribute the final product to our furnaces, or end-use industries, homes, and that type of thing.

Our association represents the piece in the middle. We have the long-line transmission pipelines that connect the producing area to the actual end-use market.

The association was formed in 1993 as a not-for-profit corporation to promote greater understanding of the contribution pipeline companies make to the economic viability of this country and our high standard of living. Mr. Chairman, I have a list of our members, and I could read it into the record, or I could just provide it.

The Chairman: Just provide it.

Mr. Curtis: First, I'd like to explain where the transmission pipeline industry fits in Canada's energy industry.

Most of our oil and gas resources are located in remote areas of the country, thousands of kilometres from industry and consumers. The Canadian transmission pipeline industry is a critical link that joins these oil- and gas-producing areas with the markets they serve.

Our member companies operate some 88,000 kilometres of pipeline that are located, in the majority, in rural areas of the country. Ninety-five percent of Canada's oil and gas production travels through these pipelines for all or part of the journey they take to the export and domestic markets.

Transmission pipelines provide a safe, efficient and cost-effective method of delivering the hydrocarbons Canadians need to heat our homes, schools, and hospitals, as well as power our cars and fuel our industries.

In 1995 the pipeline companies transported volumes of gas and liquid petroleum products valued at between $25 billion to $30 billion. That included 5.1 trillion cubic feet of natural gas and 715 million barrels of oil.

To meet our own domestic needs approximately half, or 2.4 trillion cubic feet of natural gas and 370 million barrels of liquid petroleum, were delivered to our local markets.

Another 2.7 trillion cubic feet, valued at $5 billion, and 320 million barrels of oil valued at$9 billion, were moved through Canadian pipelines to valuable export markets, primarily in the United States.

So we're moving approximately half of the gas and oil that we're transporting into international markets and, again, mostly to the U.S. market.

Our transmission pipeline companies have made huge investments in the construction, maintenance, and operation of the pipelines to keep pace with North America's growing demands for environmentally preferred fuels.

During the past 10 years, the volumes of gas transported by the Canadian pipelines have increased by about 100%. The average daily throughputs of Interprovincial Pipe Line, which transports 75% of all the oil produced in western Canada, have increased 25% during the same 10-year period.

So in total CEPA member companies have net investments of more than $15 billion in oil and gas pipelines that operate from British Columbia to Quebec.

We are a high-tech industry, as you will see when I get to talking about some of the employment numbers. Perhaps we don't employ as many people as other industries, but it's primarily by virtue of the fact that we are now a very high-tech operation.

The expenditures we've made have made significant contributions to federal, provincial, and municipal economies. For example, between 1991 and 1995 TransCanada PipeLines had spent some $3.8 billion on construction expenditures, $992 million to meet operating and maintenance costs, and another $295 million in municipal taxes. The multiplier effect of this recent expansion to the Canadian economy has been estimated at some $11 billion in that period of time. That includes long-term and indirect benefits to local businesses, pipeline services, restaurants, and motels along our Canadian right of way.

So even with the growth in capacity we've had in recent years - as my colleague from CAPP, Mr. Peirce, mentioned when he was here last week - the Canadian domestic and export potential remains somewhat constrained by pipeline capacity. Our members are looking at adding that additional capacity as soon as possible.

We operate in an extremely competitive North American market, and we must find ways to keep our transportation costs as low as possible. Being as competitive as it is, the market will find alternative ways to get this gas to it. The U.S. pipelines are now able to offer a transportation service that is significantly less than what Canadian pipelines can offer.

We're also participating in the Van Horne study at the University of Calgary, which is looking at the broader issue of how to make Canada the attractive place for adding pipeline capacity or transportation capacity of any sort in the future. They've been working with the oil and gas pipelines, the rail companies, trucks; you name it, they've been working with it. I think that study is due out soon.

.0855

The Canadian transmission pipeline industry provides direct permanent employment for some 8,500 Canadians. A substantial portion of these employees are located in rural areas. I didn't have an opportunity to get the exact numbers, but it would be my guess that somewhere around 40% to 50% would be located in rural areas to serve pipeline field operations. Thousands of other temporary positions are created by the pipeline industry during construction and maintenance operations. This can exceed the number we employee directly on a full-time basis.

Full-time and temporary positions directly created by the pipeline industry have a ripple effect on the related industries and local economies. Pipeline activity generates jobs in other sectors, such as the steel industry and pipeline services.

Retail and small businesses also benefit when the pipeline workers purchase goods and services for their families and homes. An example of this is one of the mills we use in Alberta to coat our pipe before it's put in the ground. It is located in Camrose, Alberta, a rural area east of Edmonton.

Canadian pipeline companies spend millions of dollars annually on research and development efforts that support the country's science and high-technology industries.

The pipeline industry is also indirectly responsible for the creation of thousands of jobs throughout the Canadian economy, since a substantial number of the key economic sectors rely on pipelines for a steady and secure supply of oil and natural gas to drive their industries.

I think another good example of where the pipeline and natural gas industry, in Alberta anyway, has supported rural development is in the area of petrochemicals. There is significant petrochemical development now in Alberta - it's all located in rural Alberta - that has ready access to rail service to transport the final product to the end-market.

Pipeline companies also make a substantial contribution to national and local economies through the payment of income and property taxes. In 1995 Canadian pipeline companies paid a total of $235 million in property taxes.

In many smaller communities where we operate, pipeline companies are the significant taxpayer, if not the only taxpayer. For example, in 1995 TransCanada PipeLines paid $1.6 million to the Township of Black River-Matheson in Ontario, $1.4 million to the Regional Municipality of Portage la Prairie in Manitoba, and $1.35 million to 11 municipalities in the federal riding of Parry Sound - Muskoka.

Canadian pipeline companies fully expect to pay their fair share of taxes. However, a predictable tax structure and advance warning of any tax increases are needed so that we can work the added cost into providing the pipeline services. This is critical due to the pressures of operating in the highly competitive North American marketplace. Canadian companies must maintain an efficient regulatory and cost structure in order to compete with other energy supplies.

One of the things we've worked on in one of the provinces is an understanding with the municipalities now that when they increase their property taxes... They had the view in the past that those taxes could simply be added onto the cost of the service and passed downstream to the ultimate consumer. That is no longer the case, nor has it been for the last several years. When costs go up, the market price does not go up correspondingly, so someone takes less. Generally speaking now, with some of the new ways we've been changing our regulatory environment, the people taking less would be the pipeline companies and the producers that are selling the product.

To help key stakeholders understand property tax issues and their implications, CEPA has established working relations with such groups as the Indian Taxation Advisory Board here in Ottawa. We're the first association to do that. Another good example is with the Saskatchewan Association of Rural Municipalities.

CEPA member companies have more than 100 years of combined experience in the operation and transmission of pipelines, which has resulted in a strong safety track record. The industry has developed rigorous maintenance procedures to reduce the risk of pipeline leaks, and millions of dollars have been invested in research and development of new pipeline technologies.

The high standards developed by our pipeline companies have made the Canadian pipeline industry a world leader in operational safety and environmental stewardship. As a result, Canadian expertise in the construction and operation of pipelines is a much sought-after commodity.

Canadian companies regularly export their skills to other countries through direct joint venture operations, or indirectly as consultants on international pipeline projects.

Only two weeks ago TransCanada PipeLines was awarded the Canadian Exporters Association 1996 Canadian award for international development in the development of natural resources category. The award was given for TransCanada's leadership role in a project that will improve the quality of life in Tanzania by eventually providing a steady supply of electricity to the African country.

.0900

A number of other members are also active internationally. NOVA has been active for many years; Interprovincial Pipe Line now is active in South America; and Westcoast Energy - these are all getting involved in the international area of exporting our skills.

Industry works closely with all regulatory groups involved in every phase of pipeline activity. The Canadian Standards Association sets very high technical standards for design, materials and construction of pipelines. The National Energy Board regulates the design and operation of interprovincial and international pipelines. Those same responsibilities are carried out by provincial regulators that have jurisdiction over intraprovincial lines.

Regulatory harmonization should remain a top priority for the government. An effective, efficient and stable regulatory system reduces unnecessary overlap that can cause long delays and drive up costs on pipeline projects requiring regulatory approval.

It is important to remember that the economic health and well-being of the pipeline industry, much like Canada itself, is heavily reliant on exports. As a result, our highly competitive cost structure must not be unfairly impacted if we are to successfully operate in the North American marketplace.

Canada's natural gas production has increased substantially over the last few years. As I've indicated, this has resulted in huge throughput increases for the pipeline industry. Between 1990 and 1994 gas throughput has jumped by 40%, and in the same period crude oil shipments by 15%.

The increased energy needed to move these higher volumes has had a direct impact on the emissions produced by Canada's transmission pipeline industry. Direct and indirect greenhouse gas emissions have risen from an estimated 12.6 million tonnes of carbon dioxide equivalents in 1990 to 17.6 million tonnes in 1994.

On a national basis transmission pipelines produced 1.3% of Canada's carbon dioxide emissions and 2.8% of its methane emissions in 1990. Globally Canada emits 2% of the world's greenhouse gases.

Pipeline operations create emissions of carbon dioxide, nitrous oxide and methane. These emissions come from two sources: the compressors that push the natural gas through the lines, and the pumps that serve the same function on the oil pipelines.

The Canadian pipeline industry recognizes the importance of environmental stewardship to the long-term viability of its operations. CEPA was one of the first industry associations to sign a memorandum of understanding in support of Canada's voluntary climate change challenge and registry. Through its enthusiastic efforts, CEPA was able to deliver the unanimous support of its member companies for the program.

CEPA believes that voluntary actions will be the most effective method of achieving Canada's environmental objectives. As previously heard from my colleague from CAPP, Mr. Peirce, emphasis must be placed on identifying cost-effective design technologies and operating procedures,

It is important to note that measures taken to mitigate climate change must recognize Canada's unique economic base and our need to compete on a global basis. International commitments to climate change should be measured against those made by other countries to ensure that Canada's commitments do not have a negative impact on our competitive position in the world marketplace.

Land for pipeline routes is leased or purchased from landowners. During pipeline construction, excavation is necessary to place the pipe, which is up to a metre in diameter, below the surface. This disturbance is short term in nature, since most land is returned to its former use once the pipeline is laid.

When we go through and acquire land to lay new pipeline, we go through a settlement procedure with landowners. I think one interesting statistic is in TransCanada's case because they go through four provinces, from Manitoba to Ontario. They have some 8,000 landowners, of which only 11 have not been satisfied with the compensation that's been received so far.

In Alberta, NOVA, which goes through thousands of landowners as well, has an excellent track record of dealing with the compensation issue.

Our members are committed to a fair and equitable practice in negotiating with landowners. We have in place with the National Energy Board an early public notification process to ensure there's early ongoing and full public input into project planning and development. Through this community consultation process, we're able to address public concerns and issues prior to filing applications for new facilities.

Our member companies make contributions to the communities in which they operate. TransCanada, as an example, parallels its contributions with communities surrounding the main line, which span the four provinces. From 1993 to 1995 they contributed some $6.3 million to community efforts in the area of education, health, welfare, arts, civics, sports, and an employee matching gift program.

TransCanada has also created some 17,300 construction jobs from 1989 to 1995. As a strong supporter of youth employment and education in this country, they employed some 430 young people in 1995 through its many youth employment programs. They're also a charter member of the federal government's first jobs initiative.

.0905

The chairman may be interested in the fact that TransCanada PipeLines has planned a $4.75 million pipeline maintenance and upgrading program for 1996 in the Parry Sound - Muskoka area. The largest portion of this figure will be spent on contract services resulting in the hiring of local residents and a general increase in local goods and services businesses in the area.

In conclusion, the Canadian pipeline companies have spent some $6.5 billion in Canada over the last three years on construction and maintenance of the pipeline system. Our industry makes a significant contribution to our national economy, as well as to the many rural and remote communities in which we operate.

It is important that governments at all levels provide a stable regulatory and fiscal framework that allows the pipeline industry to compete and grow in the highly competitive North American markets.

Thank you, Mr. Chairman.

The Chairman: Thank you.

Mr. Melicher.

Mr. John Melicher (Executive Director, Rural Education and Development Association): Thank you, Mr. Chairman. Thank you very much for having me here from Alberta to talk to you about something that is very important to me.

I grew up on a rural farm in Alberta, so I've been involved in rural development for a lot of years. I can talk to you about an organization that has affected rural development to a large extent in the province of Alberta.

In 1958 the Rural Education and Development Association was developed. It's an Alberta-based organization, a non-profit association. It's devoted to the development of human resources in Alberta, particularly in the agriculture and cooperative sector, and to working with rural communities.

The organization works with people in terms of the lifelong learning aspect. The very young all the way to the very old are actually involved. Last year, for example, the Elder Hostel programs looked at involving the seniors in various communities in continuing education.

I have a presentation for you, so I will just highlight some of the areas to give you an idea of what we are as an organization.

The program areas we've been involved in over the years since 1958 are many and varied. First of all, they're information-based organizations. We were previously involved in what was called Alberta rural development studies. That was an attempt to give people an idea of issues that were dominant in reference to agricultural and rural development in rural Alberta.

Then we got involved in youth and adult leadership. We have a youth program that has been running since 1961. That program attempted to develop the skills in young people so they could take their rightful role in rural Alberta.

We do a lot of work in organizational programs and organizational development. That means giving people the skills to manage and run their various organizations, which we find are very important in rural Alberta, and developing the skills so that they can take that information and present a good case for their particular activity.

We've been involved in community development. For example, back in 1972 we were involved in a program you are probably aware of, called Man and Resources. That was run by the Canadian Council of Resource and Environment Ministers. It looked at rural Alberta and asked what we needed out there in reference to resources and how we could develop those resources. We were involved in that program and ran various focus groups and projects across the province.

We're also involved in personal development for individuals, in the area of people having an impact on their own community and communities outside their own area.

Over the last five years we've been involved in an interesting program called the farm business management initiative. We hope that program will be renewed for another three years. It was trying to develop skills for the rural farm manager, the manager of a farm operation.

We're now looking at developing the distance education format of that, too, as you have previously seen with reference to Internet. We just ran a pilot project in the area of looking at audioconferencing, videoconferencing, audio-graphics, the Internet, and various activities, trying to use the technologies to extend learning to the rural community.

We've found that about 15% of the farm managers had access to the Internet, which is rather interesting. The majority of them actually had access to computers, but a lot of them really didn't know how to use them beyond doing their financial management. We're finding that's very important, so we're running pilot projects in conjunction with Agriculture Canada and the Alberta Department of Agriculture.

Another thing we're involved in for a number of years, which has had a far-reaching effect on rural development, is producing home study papers. This was done in conjunction with the Alberta Department of Agriculture, Food and Rural Development. They were papers produced in the area of production, human resource development, and also trying to develop areas such as how to roll over the farm, estate planning and those sorts of things, trying to give them skills to develop that.

.0910

Another area we were developing - two programs actually - which had an interesting effect on rural perceptions, was a land use forum. This was a public participation program that was run to look at how land use can affect the rural community and how, for example, the encroachment of increased numbers of dwellers, the various urban sectors, and so forth had an effect on the rural community. We're involved in that, and we've produced about 232 papers that were used by the provincial government to establish their land use legislation in the province of Alberta.

Interestingly enough, when you're talking about oil and those things, we actually ran a program on hazardous waste. As you know, the provincial government in Alberta developed a hazardous waste station that a lot of the other provinces have wanted to use as such.

Well, we were involved in running the public participation program for that particular endeavour. That was a rather interesting kind of program, because it really got down to some very basic concerns of the rural population. Where do you put this particular facility? Where do you get involved in that?

Another thing we were also involved in for a few years was surface rights relating to pipelines, oil wells and those sorts of things. We worked for the farmers and in the province of Alberta we developed a series of farm surface rights associations, where the farmers then took on the role of negotiating with the oil company to provide that. So we've been involved in trying to give them the negotiation skills to be involved in that.

We've been involved with community futures program, which you're probably aware of, and economic development out of the province of Alberta. They no longer have economic development officers who are employees of the provincial government. They're now economic development officers employed by the counties and municipalities. We work with them to try to help them to develop some economic ideas.

We've been using a cooperative model to develop entrepreneurship in the local areas. I mentioned to one gentleman before that we ran a program about four months ago. It was using the cooperative model for economic development in rural Alberta.

One of the groups we had there was Parks Canada. As you know, Parks Canada are looking at developing a worker coop to try to take over the role they now have and are employed to do.

As I say, we're involved in the farm business management initiative. We're also involved in international development education. We're trying to show people how other people do development in other countries. We've been working on that with the Canadian Cooperative Association, centred here in Ottawa.

The last part of our presentation has to with our research project looking at the leadership and the various needs of people in rural Alberta. Listed here on the last page, at the bottom of the third page and the top of the fourth page, are some things you might want to consider in regard to terms or conditions that people have out in rural Alberta. They're really trying to wrestle with these in reference to their role as far as being involved in rural development or their local economic future is concerned. They're saying they need a shared approach.

They also need knowledge so that they can accept the various things. I think the idea of the Internet, the varied access to information, is very important to them. They need that, because people are always afraid of what they don't know.

Let me say something about attitude, the fear of change. In rural Alberta things don't change as fast as they should. They're changing faster now, but a lot of the people out there in their fifties and sixties really don't change that quickly.

Seeing the available opportunities is important. They have to see things that are out there, so they need access to this information and to be able to see some of the things that are going on in other parts of the country. This was pointed out before.

We need to teach people how to create opportunity. That's probably the part for which people really don't have the skills, although younger people are getting more in that area.

You need to deal with people's perceptions. You need to be able to give them a vision. I say that because I've been involved with a lot of organizations trying to do their planning, trying to provide a vision of what lies ahead. The biggest fear they have is whether they can look ahead, and they really have trouble with visioning.

Strengthening the approach to the rural dimension is important. In other words, it's part of the economy. It's not separate from everybody else. The rural and urban kind of thing has to be looked at.

With respect to diversity of needs and new realities, what's going on out there...for example, globalization. A lot of the larger entrepreneurs, larger farmers or large managers, know what globalization is, but a lot of the ordinary citizens don't know what it is. They think it's NAFTA. It's not NAFTA.

.0915

They need the ability to research before acting; they need that skill. They need to know where to find the information, how to use the information.

On social-economic ties, how is the economy tied to the social well-being of individuals? They don't understand that in a lot of rural communities.

I mentioned information-sharing and related skills, the mutualization of rural and urban relationships. They need to have knowledge of a related business and their strategies, in other words, how do I develop a strategic business plan for my community? That's very important.

Leadership is an important issue - in other words, the development and definition of my expectation of my taking that leadership role, and whether I will get any help.

Applying cultures outside the rural community is significant. A lot of rural communities don't have to deal with the cultural differences we have to deal with in urban Canada. Rural Alberta doesn't really have that situation yet.

Global society and the value systems are important to them. And they need the skills to reinvest in their community.

A very important part is mentoring. People don't like to have programs thrust upon them. They like to be able to be mentored into a particular relationship.

As I mentioned, you have to look at the economic and emotional stability of the community.

With respect to rural growth centres, you have to look at where the energy comes from. Does it come from the rural centre? Can you develop various economic components in rural Alberta?

Power and political structure are very important. A lot of the rural people feel they have the power. If you look at Alberta, probably a majority of the voting power comes from rural Alberta, and that's been a contentious issue in Alberta. They do have the power and the political influence, but do they have it in other parts of the country?

Empowerment is a developmental function. Everybody likes to feel empowered, but what does it mean? That's very important, and it can be used in the developmental function in rural Canada.

Gender roles are very important. Is the female role in rural Alberta the same as the urban sort of perception? That's something we might have a look at.

The last issue is really taking charge and accepting responsibility for their own destiny. They have to do that. In other words, if they make a mistake, they should accept the mistake.

That's what we've been doing the last number of years, and we'll continue to do that. I think our organization can play a valuable role in that.

The Chairman: Than you very much, John.

We'll now go to questions from the members. We'll start with the Bloc. Mr. Deshaies.

[Translation]

Mr. Deshaies (Abitibi): My first question is directed to Mr. Hull since the last witness also talked about Internet and the need to be connected to the outside world.

Mr. Hull, you said that for an Internet site to be economically viable, a given number of clients are required; how many clients or sites would be required?

[English]

Mr. Hull: I take it that when you say ``number of clients'' you mean number of people that would be in the community. To some extent that obviously depends upon the circumstances.

Something in the order of probably about 100 to 200 accounts are necessary for an Internet service provider to set up some capacity within the community. Their costs really are their modems that they have to buy to equip the site and service those accounts. They also have to acquire a line from a telephone company, a larger line effectively, for which they pay a monthly charge.

So the costs can actually be kept quite low - for their own time - but this can to some extent be run on a part-time basis. So the entrepreneur isn't necessarily looking at his total revenue from that particular line of business.

So it's the type of thing that can actually be done quite inexpensively. That puts the emphasis on training the local population in the benefits they might have from using the Internet. That's the reason we put such a strong emphasis on the training function.

[Translation]

Mr. Deshaies: You said there is a program for small communities that provides funding up to a maximum of $30,000 per site and, if I understood you correctly, that young entrepreneurs could potentially take over that site and manage it. Are these two different programs, one providing funding for a community site and the other providing support to a young entrepreneur? Can the two programs be accessed simultaneously or does one have to choose between the two?

.0920

[English]

Mr. Hull: The funding we provide is not to an entrepreneur particularly. It's to the community organization that comes together to put in the application. That might be made up of a group of people, entrepreneurs, socially active people, young people, etc.

We fund that organization to help them get connected. They're already responsible for pulling together the site, the computer equipment - if they have computer equipment that can be used for this kind of training purpose - a location that's suitable for public entry, etc. They have to assemble all that kind of material and to find volunteers.

What we do is provide them some funding, which they would probably use to acquire modems and a few other things to service the site, because the computers that they have now obviously might not be linked up to the Internet. So we provide them with that. They would probably also use the funding to acquire telephone lines to the site, which are connected to an Internet service provider at a distant location, for example.

We think that kind of funding will basically get them through the first 18 months. We give them a contract for 18 months. They have to produce some reports on the use and the training that's been undertaken at the community access site.

What happens to the site after 18 months is to some extent to be seen, because we haven't reached that point at too many sites yet. What we've seen in some towns is that an Internet service provider has come to town, as I indicated in the case of Picton, and set up an operation.

At that point Picton may no longer need the community access site. The change has taken place within the community. There's now recently opened public access, which can be had at a reasonable price, almost equivalent to what takes place in an urban setting.

Whether the community decides to keep the community access centre is really up to them. If they find it useful - and in some places it has almost become a drop-in centre for training, etc. - then they probably can do that. The costs won't be very substantial any more, because they've used some of the money we've provided for capital equipment, etc., and it was a volunteer and open public facility in any case. So it becomes sustainable because the costs are very low.

Other communities may not succeed. If they don't train a sufficient number of people within their area, the numbers won't be high enough to attract a service provider, and they may need that community access centre to provide any sort of support locally. We're going to have to face those problems when we see what transpires over the next year or so.

There was one final point. You mentioned something about the young entrepreneurs. We're very interested in trying to find young people, not necessarily just young people, but entrepreneurial people who will begin to use these services for business development.

We're trying to spark some of these entrepreneurs into using digitization, digitizing local materials, putting those on the Web, creating Web pages, etc., as the means to kick-start small enterprises of just one or two people that go on to employ others. We do that partially through the small digitization contracts we're linking to community access sites.

[Translation]

Mr. Deshaies: This is the first year of the program and many applications have been received. At this time, your figures show that 700 applications have been received; 400 of those have been recommended, 271 have been approved and 95 have been fast-tracked. This means that as of today, 95 applications have been processed that will lead to an outcome.

[English]

Mr. Hull: Could you just expand on what you mean by outcome?

[Translation]

Mr. Deshaies: These people will receive funding, meaning that the process will be launched and that the community will be getting the service.

[English]

Mr. Hull: Those approximately 380 sites have already been contracted, so they're in various stages of the contract in process. Most communities have already got their contracts. They're establishing their sites now. In some cases we've gone back to the communities - not every community in Canada, because the program works slightly differently - and we've offered some additional students who can be used during the summer to link up Web pages for towns, or conduct additional training, etc. So the program is actually functional right now in those 380 communities across Canada.

.0925

[Translation]

Mr. Deshaies: Thank you, Mr. Melicher.

[English]

I'm sorry for the trouble in pronouncing your name.

[Translation]

You have lived for a long time in a rural environment. I suppose you come from a rural community.

Many changes have taken place in the last 10 or 15 years. As a general rule, rural communities are losing population because our young people are leaving the North. I am from a rural community up North. Our young people leave to get an education or to look for a job down South.

I appreciated your presentation and I think you have developed a lot of expertise aimed at maintaining and developing rural areas.

What is it that is lacking for all these efforts aimed at maintaining rural vitality or speeding up development in rural communities to succeed?

[English]

Mr. Melicher: That's a good question. I think some of the things I mentioned in the last part of my presentation are important, because all those items are needed. They need a sense of vision; they need a sense of people believing their area is important; they need some help in regard to the direction they can take; and I think they need a sense they're a vital part of the overall economy, are not just there to provide resources but are also there to provide an important part socially and economically for the whole country.

I also think they have to have some help in convincing young people to stay in the rural communities, and not just stay there because they have to work on a pipeline or a particular other area. Can the rural economy be diverse enough to allow them to stay there, be able to have a good living economically, and be involved in the social aspirations they're exposed to when they go to the urban areas, to university or college and come back? They need that.

I think it presently is not there, although as we develop the electronic network, to build access information from where they are, it will start to be part of it. Then probably through that they'll be able to develop that social interaction, because they'll be able to communicate with people outside the community and not have to leave their community in order to do it.

[Translation]

Mr. Deshaies: The problem we have in the North is that our young people are not necessarily benefiting from the development of our forestry and mining industries. They see those businesses - Mr. Curtis said that his company invested in the North - coming in only for the mines and the forests.

We have the feeling that they do not identify with the community, that they come only to harvest natural resources while the nerve centre, the decision-making power, is concentrated down South.

Do you think that companies who make most of their money in our Northern areas should do more, not by way of ad hoc investments in some social activities but rather by recognizing that these areas are the basis of their business and making it clear to the young people in these communities that they can make a living in those rural areas?

[English]

Mr. Melicher: Yes, I think they have to. I've been involved in a couple of projects in Alberta in which it actually has happened that way. I think the community has to get more involved in the business. I guess there's got to be something there for those people to belong to. They come from a larger urban centre to a small area, and there's got to be something there they can identify with. The community has to accept them, also.

There is this ``we'' and ``them'' kind of concept, and I think the community also has a responsibility to accept the people who come into the community and make them part of the community. I don't think in a lot of cases that's happened either. That's why it goes back to what I've said before: you have to bring the groups together. There's got to be a mutualization of concepts. They've got to come together, and they've got to accept the people from outside. I think that's part of the reason, too. I know in northern Alberta that seems to be the problem; these people come in and right away everybody says, oh, oh, there's somebody else. Well, if you want them to be part of the community, you had better accept them, too. It has to be both ways.

.0930

The Chairman: Thank you very much.

Mr. Stinson.

Mr. Stinson (Okanagan - Shuswap): Mr. Hull, when I went through this I could find nothing about Quebec. Do you have a different system for the province of Quebec?

Mr. Hull: On the community access program we were talking about?

Mr. Stinson: Yes.

Mr. Hull: No, it's the same system for all parts of Canada. When you said there's nothing to do with Quebec, what did you mean?

Mr. Stinson: In your diagram you mention all the provinces but Quebec.

Mr. Hull: No, Quebec is like every other province covered by the program. We have how many sites altogether?

Mr. Wayne Tosh (Manager, Community Access, Department of Industry): We have 46 sites.

Mr. Hull: There are 46 sites.

Mr. Stinson: I missed that somewhere.

Mr. Hull: It's a provincially based selection process, so in fact in every province there are people involved who know reasonably intimately the local, regional, and rural development issues in that province.

Mr. Stinson: Do you find any provincial regulation differences among the provinces at all with regard to setting up the system?

Mr. Hull: It's of course a federal program, but we work very closely with provincial governments to deliver the program. There are differences among provinces in how strongly they embrace the involvement in the program. In some cases provinces are heavily involved. In other cases they said it's a federal program, you implement it, and that type of thing. But they're all quite interested in the issues. There are, as my colleague pointed out, very important, very complex issues at play in terms of rural development. A lot of provinces have significant programs in those areas as well. We try to work as closely with them as we can.

Mr. Stinson: Since you're from British Columbia, you'd be working very closely withB.C. Tel, would you not?

Mr. Hull: There is also a provincial program. It's called the Provincial Learning Network, and it rolls out Internet access to certain areas of the provinces. We work closely with them so that we're not duplicating and, more importantly, harnessing each other's strengths, etc.

Mr. Stinson: Thank you.

Mr. Curtis, you mentioned safety checks. That would be one area I wouldn't mind hearing a little bit about. My background is in exploration mining. We'd sometimes have to cross a pipeline, during spring break, as a matter of fact. I know of cases where cats have gone down on top of the pipelines.

Mr. Hull: We have quite an extensive safety and maintenance program on our pipelines to maintain their integrity. We support in most of our jurisdictions first-call type of operations. It's a call-before-you-dig type of program, so that we can come out and mark these pipelines before people go over them and have accidents by hitting them.

We undergo extensive testing programs throughout the year. We run what we call, to use a term of reference here, a smart pig. It's a device that goes inside the pipeline and is pushed through the pipeline; it's an electronic device that takes a look at the steel and measures the steel. What we're looking for there are potential corrosion sites, where the pipeline has eroded to the point at which it might become a safety issue. If we find that, we'll dig them out and replace the pipeline in advance of any rupture. In addition to the smart pigging on an annual basis, we'll go in and excavate certain pieces of the pipeline to take a look at its condition and see how it's going.

Mr. Stinson: Do you have a standard depth of...?

Mr. Hull: Of putting the pipeline into the ground?

Mr. Stinson: Yes.

Mr. Hull: It will vary, depending on the terrain and where we are. For example, when we go under roads, it goes down ten or twelve feet. An average depth would probably be six to eight feet.

.0935

Mr. Stinson: You've run into federal-provincial overlap quite extensively. Would you say it creates a major problem?

Mr. Curtis: For the pipeline industry regulatory harmonization is definitely a key area. We're looking for one window. You don't want to have to do an environmental process that's in relation to the province as well as to the federal government and end up doing two. We want one, and we're taking some steps that way.

Alberta Energy Company and TransCanada PipeLines Ltd. are working on a new pipeline called Express Pipeline. For the first time ever there was a joint hearing of panel members with the National Energy Board and TC. So we are taking some steps in the right direction.

Mr. Stinson: Would you sooner see it handled by the federal end or the provincial end?

Mr. Curtis: In terms of the association, I'm not sure we'd espouse an opinion one way or the other at this time, as long as it's one.

Mr. Stinson: Mr. Melicher, does your group work with other provinces?

Mr. Melicher: A little bit. On a request basis we will go to other provinces. We have worked extensively with some. In the lower mainland area, and in Saskatchewan and in Manitoba, we have done some work. We're basically an Alberta-based organization, but we will go outside the province if requested.

Mr. Stinson: Do you know whether there are any other provinces with the same type of organization in place, or are you the only one?

Mr. Melicher: No, there aren't. Other organizations might do similar things, but not with the breadth of the things we do. Actually, we were involved in an international exposition on rural development in India back in 1985, and we found that there was no other organization like us in the world. We were asked to go there, but because we're a non-profit association we weren't able to go there.

There are organizations that do similar things, such as leadership development for youth, some rural development, and work with community organizations, but they don't do the kinds of things we do. We're associated with the provincial government, with universities, and with the continuing education organization throughout the province, so we're rather unique in that way.

Mr. Reed (Halton - Peel): I should comment at the outset that I think all of us are beginning to realize we're witnessing a window in history, which is coming on us so quickly it's very hard to comprehend. I hope it doesn't pass me by and go out the other way before I can grasp exactly the incredible opportunities that have been opened up very, very recently and are ongoing.

In order that I may better understand the community access, Mr. Hull, am I right in assuming that this community access point has a potential to become or is the server for this community?

Mr. Hull: It could. A community access - let me just clarify - might be a community centre, a library, a school. It could be any physical structure. We don't want to pay for bricks and mortar, so we tell the communities to find whatever convenient location they can find that allows public access.

Mr. Reed: Does that mean that I, as a person at home who wants computer access, can access this?

Mr. Hull: Yes, you could. You could potentially dial in. That's exactly correct. It wouldn't be what the community access centre itself would provide.

For example, people would come to a library, for example, that might be equipped... I'm reading something from Newfoundland on opening up their libraries for this kind of venture. The library would train people on how to use the Internet.

If you're a businessman who has come to a library and found some interesting electronic business services and decided you want a home page - maybe a student has put up a home page for you on the server within the library - chances are you're not going to want to do it very long because you won't want to trot down to the library to see whether you have an e-mail. But for the first four or five months, when you're finding out whether this would be a good idea or not and you don't want to spend a lot of money, this probably is not too inconvenient.

While you're waiting for a little bit of mail on your e-mail, on your home page, other townspeople are being trained as well. Pretty soon an Internet service provider says, well, gee,200 people here have Internet exposure, are setting up home pages, so I can set up a sort of Internet service account, buy 20 modems, buy a big telephone line from the telephone company, and instead of people dialling in as they have to through their community access site to a distant town and incur long-distance charges, which is what we cover basically, they can dial locally and have no long-distance charges. They are paying just $20 or $30 a month.

.0940

If you're a business person, $30 a month is probably pretty good, especially if you're picking up some trade. So you want that service out of your business. That's when you begin to dial in to the Internet service provider.

Mr. Reed: I guess what I'm getting at is that we have recognized a big deficiency, which is becoming more and more glaring as these services expand. That is the communication system in the rural part of the country, which is still dependent on party line service for telephones and so on. These tremendous opportunities are going on all around them, but areas that don't have the single-line communication systems, which those of us who live closer to an urban area take for granted, are still stuck. I brought up that subject -

The Chairman: Some 66,000 Bell subscribers, if I have that information correct, in the Ontario-Quebec system are on party lines; they would not get access to the information highway.

Mr. Reed: I thought that point should go on the record.

I have a question for Mr. Curtis.

Mr. Curtis, you've talked about the good relations between landowners and pipeline companies, yet we know of some - I think you mentioned eleven - who are dissatisfied. They must all be located in southwestern Ontario. I just wondered whether the organization you represent helps to establish standards for contracting to and for responsibility by the pipelines.

A number go through the riding I serve and have not had difficulty. I know of others where the complaint is made about, for instance, pipelines that are no longer used, are taken out of service, but are still there. Apparently, at least the accusation is, they are not monitored or looked at and they can continue to deteriorate from being out of use. Because they are not very far underground, as you suggested they present some kind of a danger or threat to the farmer, when the pipe may not be too far away from the barn to the house or whatever.

Would you comment, please, on how you participate in that?

Mr. Curtis: The association is essentially quite a new one. Last year was our first full operating year. We are looking at the issue, and we are currently working on establishing some guidelines that our members could follow in dealing with landowners, such as the types of things we should do and work out. We'll work with our regulators as well in that respect. We'll eventually have some guidelines in place.

Most of our members, I think if not all, do an excellent job. We had one incident here a couple of years ago, but for the most part that is one major incident in 20 years or 25 years of operating history. I think when you look at our track record, you will see that we have an excellent track record in dealing with landowners. It's not possible to please everybody all the time, but in TransCanada's case I think 11 out of 8,000 is pretty good.

Mr. Reed: Are you going to address out-of-service lines?

Mr. Curtis: I will. I'll get into it now.

One of the other issues we are addressing now...we've had a group working for the last year and a half, a task group that has been formed to take a look at the issue of pipeline abandonment, at what we should do when we don't need the lines any more. Their report is due here imminently. I think it is due between June and September. We have put it in the form of a white paper to get it out for discussion. A fairly narrow group has been working on it.

.0945

We've had representatives from the National Energy Board, the Alberta Energy and Utilities Board, the producing association, the pipeline association, and other groups to look at what the right things are to do with these pipelines. It's to cover off all pipelines, pipelines from 1 inch to 46 inches in diameter. It will look at whether we should abandon them, fill them with inert gases, fill them with concrete, or pull them out of the ground. It's looking at the whole gamut of things.

Normally - I can speak, since I have spent 18 years with NOVA - when we abandon a piece of pipeline, we maintain cathodic protection so it won't deteriorate. But the process we've got going now will put in place a comprehensive set of guidelines as to what should be done.

Mr. Reed: Thank you.

I'd like to make a comment, Mr. Melicher. I was looking at the list of people who sponsor your organization. I don't see a government involved there.

Mr. Melicher: No, we're a non-profit association. Governments are involved, but not as members. They're more involved in our various relationships as far as programs, projects, and an advisory service are concerned.

Mr. Reed: I think you're an example of good things that can be done by good corporate citizens.

Mr. Melicher: Yes.

Mr. Reed: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Reed.

Mr. Wood.

Mr. Wood (Nipissing): Thank you, Mr. Chairman.

Mr. Melicher, it's an interesting program you have. We're all sitting here wondering how the federal government can get involved, and I'm wondering what you perceive as an effective way the federal government can get involved in small business and in rural redevelopment. Should it be just in a supportive role, or should we be more involved in the market? How do you perceive that?

Mr. Melicher: I think in a partnership role, more than likely. I used, for example, the farm business management issue, which is a partnership role between the federal government, provincial government, and local organizations such as ours.

The federal government provides some funding, it provides some direction. The provincial government provides some funding, some direction, and some resources. We're also able to utilize their people. Then we provide the administration. The end product, which is the user or the farm manager, also provides input. They're involved, for example, in an advisory council at the provincial level. They're also involved in an advisory council at the federal level. Also, too, the fact is that when they actually go out and present the information, the person out there has a stake in it. They've put 30% to 40% of their money into it also.

So nothing is free. It's sort of a partnership. In other words, I'll put money into it and you put money into it; I'll put time and you put time. I think that's the way to do it, because then everybody has ownership of it and everybody has input into it.

Mr. Wood: How many communities in Alberta do you help in a year? Do you keep track?

Mr. Melicher: It varies a lot. Our community quite often can be total Alberta or be an Alberta agricultural region, which is probably one-fifth of the province, or it can be a local community. We don't specifically target one area. We do it basically on requests, and any time we run a program we try to be as widespread as possible.

For example, we'll run a program on skill development for entrepreneurs and draw people in from all walks of life. Predominantly we focus on the rural areas, but we have the urban areas because we're quite involved with the credit unions.

Mr. Wood: Do you hang around and wait for the phones to ring, or do you go out and do a lot of marketing?

Mr. Melicher: We do marketing. Most of it is through out network, through our formal and informal structures. For example, Alberta Agriculture provides us with all its regional staff. They actually go out and help market our programs. We do it through the Alberta Association for Continuing Education, which are all the further education councils in the province. They are learning networks in the various communities in the province.

We do advertise, but it's mostly through the organizations we're affiliated with. We don't spend a lot of money on marketing as an ordinary private company would.

Mr. Wood: What's your budget? I didn't see it.

Mr. Melicher: I made some annual reports available. Our budget actually is a little over $500,000, but that doesn't include the farm business management initiative, which last year was$1.5 million.

Mr. Wood: Are there new people coming on board all the time, or is this the membership?

.0950

Mr. Melicher: That basic membership has remained somewhat static over the last four to five years. We have people coming and going, but our biggest number is not our membership, who are kind of the founding members that drive the organization. Our clientele and the various people involved in the organization change from year to year. We're involved in one organization for a year and might not be involved with it the next. It's quite a varying clientele. We try to react to the needs of the people in rural communities.

Mr. Wood: Mr. Curtis, I want to tell you I was cut to the quick when you mentionedParry Sound and Muskoka but didn't mention Nipissing and North Bay, where you're putting in$10 million. I really felt slighted. I know that the chairman is busy writing up a press release now after he heard what you had to say.

I want to know how you characterize the transportation infrastructure in rural Canada for pipelines. Are any improvements required, in your mind?

Mr. Curtis: I think there's always room for improvement. Pipelines have some advantages in that we're in for the long haul. We're not coming in to produce a resource and then go again in five years. Our companies have been in business for over thirty years now, and when we move into communities we are there for the long haul. Community relations are important. Our companies for the most part all have active community relations in the areas we go through.

In terms of improvements, one thing we're trying to do is to work with rural community associations to help them understand more about the economic regime we're working in now. It's a competitive north American market. One of our biggest challenges right now is managing the property tax increases we're facing in a number of provinces. As federal transfer payments are cut and provincial budgets are bounced, it's working its way to the municipal area. We're there and we can't move. We're viewed as a source of additional revenue for municipalities. That is one area of challenge.

Mr. Wood: I don't know whether you can answer this question. In my riding, and in North Bay in particular, TransCanada PipeLines has been doing extensive renovations and expansion. The pipelines come in and lay down new piping and everything, and you would be surprised at the number of people who come to my office and tell me - now, I don't know if this is true or not - that the pipe you lay down is imported. Is it or isn't it? Do you know? You talked about the coating being done somewhere, but the pipeline... All of these people are very patriotic and they wondered why we can't do this in Canada. Maybe you are doing it in Canada, but they tell me you are importing it from Germany. I've tried to find out but I never could.

Mr. Curtis: In the instance you're talking about I don't know where the pipe came from. Generically speaking, we bid our pipe and we buy a lot of pipe from Canadian manufacturers. We've also bought some pipe offshore because it is a competitive environment. We have to offer the lowest transportation cost possible. If pipe from Japan or Germany is significantly cheaper, it's a competitive marketplace and our Canadian industries have to compete. But we also, I know, buy a lot of pipe from Stelco and IPSCO and those companies.

Mr. Wood: Good, so I'll have an answer.

Mr. Curtis: And it's coated in Canada.

Mr. Wood: That's right. I know that part. Thank you.

The Chairman: I have some questions for all of our panellists today. Let me start with Industry Canada on the community access program.

You have close to that 400 number in your first year. How many are you planning for this upcoming year and how many for the third year?

Mr. Hull: We have a total target of 1,500 to hit. We're hoping to do 500 or a little more this year.

The Chairman: That's for 1996.

Mr. Hull: That's right. We may actually be more than that.

The Chairman: Has the selection process begun for this -

Mr. Hull: No. The applications aren't due until the end of October. We take the selection process through November and part of December. We hope to have the notices out before Christmas.

The Chairman: One issue Mr. Reed brought up was the inability in many parts of rural Canada because of the lack of Bell technology. Have you entered into discussions with Bell Canada and its sister corporations about the fact that rural Canada doesn't have the infrastructure to accommodate this type of activity?

.0955

Mr. Hull: Almost on a continuing basis, and we also do this with a lot of other partner organizations that are trying to put a bit of pressure on the system. There's a lot of interest. There's growing interest in the telecommunications industry to service outlying areas to make sure they have Internet capability, which is what we're talking about. But to have Internet capability you also need to upgrade the telephone switching systems to some extent.

There seems to be a growing interest, partly because there's significant traffic. Look at what's taken place in the last two years with respect to the number of Internet service providers in the country. When we started getting involved in this two years ago, you could count them on one hand. Now it would take several pages of a telephone book to fill them up. There are a lot of people in this business now, and they're effectively providing business to the telephone companies who rent the lines to them. That kind of traffic results in an improved service.

The Chairman: So it's your opinion that the telecommunications companies are willing to undertake an upgrade of their switching equipment?

Mr. Hull: Yes, they will respond to the marketplace, and what we're seeing as the marketplace has power if it organizes.

The Chairman: That's going to be a fairly substantial capital investment for those companies. Should that cost be borne strictly by the rural subscribers, or should it be borne across the board?

Mr. Hull: You're asking questions that I'm really not in a position to answer. There are policy people in telecommunications policy. It's not my field of endeavour. What we're trying to do with a program like this is to build the volume of users that will attract entrepreneurs, both large and small, to come to those communities and effectively provide the service. I really can't talk about the restructuring.

The Chairman: John, maybe you could offer an opinion on that. Should the upgrade be paid only by rural people or should it be spread across the system?

Mr. Melicher: I think it should be spread across the system, because the rural population is a very small part of it. I think the utility has to spread it across the whole system, like any business does. You have your real cash cows and you have others that aren't, and you spread it around. But I think he's right. The user will dictate the number of people who come in to service you, like any other community. With the larger satellite communities spreading out across the province, particularly in Alberta, I think the access will be out in those communities, and it's just a matter of jumping a cost to the other communities so that you don't have to pay long distance charges. It think that's a very important part.

I think the long distance charges are stopping people from being involved in the Internet system. If you can jump enough times and everything is a local call, then eventually you get that network.

The Chairman: I can't speak for Alberta but I can speak for Ontario and the Quebec network with Bell Canada, but there are 66,000 households that couldn't hook into the Internet even if they wanted to, because the switching system is such that they're on a party line.

Mr. Melicher: Right. In Alberta, most rural locations now have direct one-line access.

The Chairman: John, you mentioned that you work with the community futures initiative of the federal government. What's your evaluation of that? Is it doing it's job to help rural development? Is it helping with the access to capital issue?

Mr. Melicher: It is if it is done in conjunction with other organizations in that area and doesn't become the only one to do it. I think they have to... We were involved in a co-venture in the Lac La Biche area. I went up there and got involved with Community Futures, and helped take that community - with their direction - through a strategic planning session where they looked at their economic development within that community.

I think the important part is for them to partner with other people. A lot of the communities, particularly in our province - a lot of people have a good idea of what's needed, but once again, sometimes it's a program coming into the community. The idea that those people are going to take hold of that sometimes brings somebody else in to help partner that.

The Chairman: Did the infrastructure program the federal government undertook in rural Alberta serve a purpose? Was it successful? Is it something that should be looked at for the future?

Mr. Melicher: Any program has success but I guess it depends on who actually takes the initiative in a community and works with it. I think it should be revisited and look at again - maybe part of the overall programs that are available to a rural community.

The Chairman: Mr. Curtis, thank you for your note about Parry Sound - Muskoka. I want to explore that a bit.

.1000

You mentioned $4.75 million, and let's just use that as an example rather than as a specific case. Of that amount of money that's going to be spent on your maintenance, what percentage of that will flow to local contractors, as an estimate?

Mr. Curtis: Mr. Chairman, I'd have to get the breakdown of where it would go and provide that to you.

The Chairman: That's a critical thing. If you're going to spend $4.75 million, which is great, and all of those contractors - and I'll use my riding as an example - come from downtown Toronto, yes, that has some benefit to my community, obviously. But it's far greater if the contract is let to somebody from Sundridge, Huntsville, or wherever.

Mr. Curtis: Again, I'd have to get those details. Generically speaking, I can speak from my experience on NOVA, which would not relate necessarily to the Parry Sound one. We look to local contractors to provide what work can be done.

The Chairman: So would it be a policy, then, of your members to try to go local first, and only if that's not available, they'll go somewhere else?

Mr. Curtis: That's right.

The Chairman: Does your association have legal counsel?

Mr. Curtis: As required, yes. We don't have any on staff.

The Chairman: When you do contract out your legal work, is it done through a rural firm or through an urban firm?

Mr. Curtis: Mr. Chairman, it would be done through an urban firm, if you like. It would be done in the city of Calgary, for example.

The Chairman: Is there a reason why it can't go to a law firm operating in rural Canada?

Mr. Curtis: No, there's no reason. When we contract out our legal work, we look to get those lawyers who are experienced, primarily in our case in the regulatory area that would deal with, say, National Energy Board types of hearings. Whether it's a coincidence of geography or not, for the most part I believe their offices, anyway - let me put it that way - happen to be in urban centres. Where they live could be wherever.

The Chairman: The trouble is it's almost a chicken and an egg thing. If what you're looking for is experience and you always give the work to the firm in the city, of course they're always going to have the experience. Somebody trying to operate outside is going to have difficulty getting it. But it's one of the problems that I perceive we have - and not just with your organization. I'm not picking on you.

Mr. Curtis: No, I appreciate that.

I have to get back to the exact percentages, but from my experience my guess is that probably 40% to 50% of our workforce in the pipeline companies is split between urban and rural centres. Because we are moving into the high-tech area with the operation of our jet turbine compressors - those fully automated stations are all the latest technology - we have located highly trained people in rural areas. Admittedly, they probably had to leave the rural area to go someplace to get trained, and then are living back in that area.

So I think with the pipeline companies there's a balance between urban and rural areas now. Certain skills right now are still located in urban areas, and other skills are located in the rural area or transplanted back there.

We have active youth programs, because we need to train those people for future operations.

I think maybe with the devolution of the concept of a virtual office, which may have been discussed here before, it becomes less of a concern where people live any more. I know some of our member companies are looking at that. It's not necessary to have people come and work downtown with the advent of increased communication capabilities, some of which we've heard here this morning from Doug. It allows people to work from their homes, and that could easily be located in any rural community. There's no need to be in an urban centre any more.

The Chairman: I have one last question for John.

I don't know whether I heard this correctly, but you talked about almost a certain amount of pessimism - I think ``despair'' is too strong a word - that would exist in some of the rural communities or areas that you serve, and that there needs to be a revitalization to bring some spirit or some direction. Is that accurate?

Mr. Melicher: Yes, but it's based mainly on the inability of these people to generate what they want to do...the lack of resources, the frustrations they've maybe gone through to try to get the help they need. I think that's basically it. They're really keen to do something, but they have sometimes come up against so many walls, either bureaucratically or economically, or whatever, that they may become very frustrated. What happens is they then start to turn in on themselves. They ask themselves what they can do as a group.

.1005

Another thing that's happening in the rural communities is that the organizations are also starting to disintegrate. It's no longer a question of the organization taking the role and going ahead and doing things. It's falling back on individuals, because organizations are slowly disappearing.

They're reorganizing, they're retrenching, so there's somewhat of a void being put out there. You know, Joe used to do it. His organization used to do it for me. Now he's not doing it any more.

It's basically a frustration. The time is really ripe for somebody to go in there and say, okay, let's sit down, let's talk about this, let's work at it. We've been performing that role for a long time, and quite often we haven't had the resources or whatever to do it.

The Chairman: Thank you very much, gentlemen, for your testimony today. I think it was very worth while, as were your answers to the questions. My thanks to the members of the committee.

We stand adjourned until Thursday.

Return to Committee Home Page