STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 17, 2000

• 1831

[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): The chair calls the meeting to order.

I'd like to have the first group of witnesses at the table, please.

The order of the day is Bill C-11, an act to authorize the divestiture of the assets of and to dissolve the Cape Breton Development Corporation; to amend the Cape Breton Development Corporation Act; and to make consequential amendments to other acts.

In our first round table we have a representative from Northside Futures, Madam Kathy Baker, the chair. From the Devco Pensioners group we have Sam Boutilier, who is the president. From the United Families group we have Madam Edna Budden, chairperson. From Nova Scotia Power Inc. we have Murray Coolican, vice president, public affairs.

Mr. McNamara, we're delighted to see you at the table. You probably want to remove yourself—how can I say that politely—because I think I have you in with a different group. I apologize for the inconvenience. I think people were looking at the 7:45 p.m. list. So somebody asked you, inadvertently, to join this particular group. Your input will be at least as valuable with that group at 7:45 p.m. I wonder if you could accommodate yourself. Am I right?

• 1835

We had brought them in together with this other group. I think I have the Nova Scotia Power Corporation in this place. That's why I thought it was Mr. McNamara. I hope it's not a problem, sir. Is it?

A voice: No.

The Chair: Okay. We're still friends then.

A voice: Oh, yes, Joe.

The Chair: Okay, good. I'll tell you what. That means you can have an extra slice of pizza.

A voice: No, thanks.

The Chair: The alternative is Chinese food.

I propose that we begin. In a few minutes we're going to have a little bit of an interruption, so I'm saying this by way of introduction to our guests.

By the way, if I didn't say welcome, I should have. I did not introduce the mayor, because the mayor is part of our second group, is he not?

The Clerk of the Committee: Yes.

The Chair: So the mayor is part of our second group as well. I think some people have been confused about the way to read this thing.

But Mr. Mayor, you're more than welcome to just stay there. We'll make that adjustment. It's not a problem.

Mr. David N. Muise (Mayor, Cape Breton Regional Municipality): Perhaps you could clarify. There does seem to be some confusion. Would you be so kind as to read the 6:30 list so that we know who's on it?

The Chair: The 6:30 list is Northside Futures, Devco Pensioners, United Families, and Nova Scotia Power Inc. Then on the overleaf it says 7:45.

Mr. David Muise: Oh, okay. The list we have shows us at 6:30. I guess that's been changed. This was from 10:55 this morning. And Nova Scotia Power is not here.

The Chair: Yes, I know. The list the chairman has is always the official list. But you're welcome to be part of this round table.

Mr. David Muise: Thank you.

The Chair: Welcome. Let me give you a formal introduction. We have Mr. David Muise, His Worship the Mayor of Cape Breton Regional Municipality. Thank you very much for joining us.

Our usual practice is to give the witnesses an opportunity to speak. We usually try to limit that to about ten minutes, because our focus is the bill itself. While we are a standing committee of the House, for this purpose we are a legislative committee and we deal with specific issues, and that's the legislation. However, we recognize that you may have input that would cause this committee to reflect on specific articles of the legislation. Anything you have come to say will be helpful. If you can focus our attention on specific items, you will be even that much more helpful.

With that in mind, you have up to ten minutes to say what you will. We'll try not to interrupt you. After that, members of Parliament will engage in questions and answers. We usually start with opposition members.

It's sometimes troubling for witnesses who come before a committee that members of Parliament will come and go in and out, especially since we are sitting beyond the voting period. Members of Parliament just finished voting in the House. The only absentee there was the chair. He's developing a rather nasty habit. But everybody else is coming from the House and probably from other duties as well. So please don't be troubled by members coming in and out.

And because we are sitting through a supper hour, we're going to have some very light food brought before us, and you're welcome to share that with us as well. The food on the menu tonight is Chinese and pizza. It's not as sumptuous as you'd think members of Parliament normally have, but it's probably enough to keep us going for a couple of hours. So when that comes, you're quite welcome to stand up or eat it at the table. All I ask is that you maintain a certain quiet, for your sakes and for the attention of the members.

• 1840

The last item to address is that we have translators, and they will translate into French or English as you speak. You have the microphones down below, under the dash of the table. You can use the earpiece just simply for volume or you can use it for translation as you like.

In that vein, if you have documents you want to present to this committee, it is the practice of this committee to accept documents only in both official languages. So if you have it in only one of the official languages, you can make it available to one of the committee's assistants—for example, that gentleman in the blue sweater—and he'll put it either here or over to one side and members can access that document as they wish. The document will then be translated by the committee translation services and distributed to all members.

So anything you have to say, if you have it in writing, will be read into the record and every member will get it afterward. You need not read anything. In fact some members and some witnesses often find it even more useful if people speak not from notes but from what they already have in terms of their preparation on the issue.

Okay. I've given all the introductions I want to give. Government members are seated on this side, and three or four of them just left. Opposition members sit on this side, and three or four of them are here. I won't make the introductions. You can read the name tags as you go along.

Why don't I just go on the basis of the order I have written in front of me? With all due respect, Your Worship, I'll go to Madam Baker, who is chairperson of Northside Futures.

Madam.

Ms. Kathy Baker (Chair, Northside Futures): First of all, I'd just like to have it noted that I'm kind of disappointed in the rush we all have been put under by being notified on Monday to be here for Tuesday or Wednesday or whatever. For me personally, I'm the only one who's working in the home, and I had to give up work to come here, because I thought it was so important. But I just want to note that by having these people here today, it's not enough involvement or input from the community. I'd like to have that noted, please.

The Chair: So noted. Thank you, Madam.

Ms. Kathy Baker: Okay.

Good evening, committee members. My name is Kathy Baker. I'm a coal miner's wife, I'm a mother, and I'm chairperson of Northside Futures. It's an organization we formed on the north side of Cape Breton when the government announced the closure of Devco.

Uncertainty and anxiety were created for all our households throughout Cape Breton by the announcement concerning this closure. It's always a difficult task to predict the social impact on the communities when they become victims of an event such as losing a major traditional industry. Prediction of low social impact often brings criticism that not understanding the severity of the problem comes to light to everybody involved and to the politicians. Well, I'm here today to tell you some of the problems our group has faced over the last sixteen months. I'm here today representing the families, the mothers, and the children.

We've been so involved with our community, and in January we started receiving calls from miners' wives. We received a call from a wife crying because she had no milk or Pampers for her baby, who had a serious medical problem, because her husband was laid off and waiting on UI. So at that time we started to investigate it and went to welfare and further. But where he was going to receive UI, there was no help for this family. So we ourselves had to go out and purchase milk and Pampers for this family, for this baby who had a very serious medical problem.

• 1845

These are the problems we're facing today. And that's only with the miners on UI or waiting on UI and running out of UI. This is before they have nothing left. What's going to happen after?

On another call we went to a house where they only had frozen french fries, which they ate for two days. They had no help, because they were in the same position. You can't get welfare if you're going to have UI. These are some social problems we've having.

On the north side 400 employees were employed by Devco. That's where the Prince Mine, the mine they're trying to sell, is located. Now there are only 22 left working on the north side area with Devco. They're all laid off. This is the problem in the north side area.

HRDC has done a study. They said the unemployment rate is 20%. But recently we were involved with a group with HRDC for a program they're going to try to get going in the area, and we did a study, and there's 48% unemployment on the north side right now, and that's not including what's going to happen down the road. In June the miners on the north side will lose their EI benefits.

I'm here today to talk to you about Bill C-11. Especially we feel that paragraph 17(4)(b) of the old Devco act, which protects the families, should be left there to help the families. That's the main thing our community would really like to see amended for it to stay there, because of the social impacts right now on our community. We need that right now to help us get through this.

We've also been contacted by the local high school, saying the miners' children were showing up for school—they're all bused to school from the outside areas—with no money for lunch and no lunch. So since then a breakfast program has been introduced voluntarily, with the help of people at the school. At least they'll have breakfast and maybe not have lunch. These are the problems we're facing here today.

We also had a call from the school stating that eighteen students could not come up with the $18 to go to the graduation this year. Part of Northside Futures thought it was their responsibility, so they went out and raised money for those kids to go up on stage to get their diplomas for grade 12.

We also had to pay for thirty of the miners' children to enrol in UCCB by a certain date, which was only $20 each at the time, so that they wouldn't miss out on the deadline to receive a scholarship or a bursary. You have to realize their fathers are waiting on UI and things like this, or for some their UI is running out. These are the problems we're facing right now on the north side.

The destruction of the family unit is becoming an alarming situation. Just yesterday we received a fax from Transition House that distress calls have increased from 310 to 470 a month. Some are new cases, but every case now is becoming more violent and outbursts are becoming more frequent. Director Bea LeBlanc is afraid an incident will soon lead to a death.

We do not want to portray Cape Breton as a violent society. We make these points only to show how desperate some families are. Many miners are going to lose their UI in June. When does the Cape Breton development act kick in for them to undo social and economic hardships caused in the old act?

On a more positive note, Northside Futures is proud to say we have sponsored fifty senior high school students to participate in a Christopher leadership course to try to bring back their self-esteem. We still continue to put forth a positive image for our youth and our families. Please do not disappoint us or them.

I would like to turn this over to Faith Carter, our co-chair, to summarize for us, please.

• 1850

Ms. Faith Carter (Co-Chair, Northside Futures): Good evening. I'm Faith Carter, co-chair of Northside Futures. My part in this presentation is to remind this committee of the Robert Donald report in 1966. He said it was ethically wrong and economically unsound to introduce young people into the mining force, where there was no assurance of future employment. In other words, we would be faced with the problem now, but the government wanted to save Nova Scotia Power $300 million. You see, oil prices had soared, so back to coal we go.

Now, in 2000, it seems our fate is sealed, but please tell us what major steps have been taken to offset the devastating unemployment and social suffering. Please don't tell me you have given us $68 million. That is a far cry from the moneys that will be taken from Cape Breton's economy and the island's future development. Our young people leave in droves to find employment in other provinces or states. The miners accept the general principle that a reduction in mine employment can be tolerated if other employment opportunities are made available.

Mr. Donald suggested some 30 years ago that the area of Cape Breton should be prepared for the eventual cessation of the coal mines, in a manner that would alleviate the social hardships, and at the same time create an attitude of hope and optimism for the future of the area. I suggest to you the timing of the passing of Bill C-11 is just another way of demoralizing the miners of Cape Breton.

My learned colleagues will explain, in part and parcel, why the stoppage of this bill is so important to the lives of the Cape Breton miners. Thank you.

The Chair: Thank you very much, Madam.

Let me go to Mr. Sam Boutilier from the Devco Pensioners group.

Mr. Sam Boutilier (President, Devco Pensioners): Thank you.

The creation of Devco in 1967 was a very positive move, creating steady employment and a sense of security that Cape Bretoners had not experienced in a long while. In my opinion—which is shared by many in the industry—if Devco had stuck to the business of operating the coal industry, it would still be thriving and would continue to do so far into the future. Instead, it ventured into raising cattle, farming, and God knows what else. None of those ventures were successful, and we are now the victims of their mistakes.

There's been much said about Devco being a drain on the taxpayers. I strongly disagree with that. In truth, I would say more revenue from Devco and the spinoffs went back to the government than was put into the industry. For example, in 1991-92 we sold four million tonnes of coal—two million on the foreign market and two million to Nova Scotia Power. Add to that the fact that it contributed to hardworking, upbeat, and, for the most part, happy and proud people. That could not possibly hurt the people of Canada.

Coal can still be a viable industry in Cape Breton Island, and with thoughtful development and strong management, it could make a great contribution to the future of our province. Prince and the Donkin Mine will be small operations compared to Devco. However, there are tremendous possibilities lying beneath the surface, and coal is just one of them in Cape Breton Island. We have gypsum, salt, copper, and nickel that also offer possibilities.

On the island, we have an excellent supply of coal and a ready market for it. The infrastructure is in place, and mine workers are already trained, skilled, and ready to produce. The equipment is in place. What a boost to our economy this would be. To have this mine in operation...if the government is not interested in such—especially Donkin—there are interested parties locally who would be ready, willing, and able to take on this venture.

There have been many mistakes made in the past, and we're wasting precious energy dwelling on them. I would love to see Cape Breton able to move forward and create a small coal industry that could make a positive contribution to the workers and the island economy. Surely we can learn from past mistakes and move on toward the future, with a positive attitude and optimism for our future.

• 1855

There were many concerns raised among the workers at Devco, when Devco was brought to a close. One of the issues addressed the payment of the so-called non-contributor pension. I'm going to say a little about this non-contributor pension, and I've thought this for many years.

In 1922, this pension was formed through what we call the long tonne and the short tonne. The miners loaded the long tonne and they got paid for the short tonne. That meant for every tonne of coal they loaded, 240 pounds of that coal went into the pension fund. In 1972, the government took over the pension fund and called it non-contributory. That's very misleading as far as I'm concerned, and as I said, I've thought that for years. I think that should be changed before Devco's finished with.

We must be assured in writing that payment of this pension will continue. That's something we don't have in writing, and we have no idea what's going on with it. The Devco Pensioners association is now in the process of preparing a legal suit against Devco for the inequality of payment of this pension, where salaried employees are paid a higher premium than non-salaried employees. Knowing this, we feel we cannot simply trust that all will go as it should. We request guarantees signed, sealed, and delivered.

Another point here is on domestic coal. This is something that comes up at every meeting we have with the Devco Pensioners association. I think it should be addressed by the federal government quickly, because our people are out on a limb and they don't know what's going to happen.

It's been a long-standing policy of the Cape Breton Development Corporation to provide domestic coal for home heating to Devco retirees and widows of former Devco employees. To date, we are not aware of any government statements concerning this benefit before the sale or closure of the corporation. We require that this issue be addressed, and we would certainly like to see it addressed today—if not today, tomorrow. Our people don't know what's going on. There are lots of rumours out there. I think something should come out of this meeting, to make sure we have some information on this.

We have kind of a mess in Cape Breton Island right now. We have one of the highest unemployment areas in the country, and once Devco closes it's going to be even higher. There doesn't seem to be anybody willing to fix it. I will state right now that Devco was the greatest thing that ever happened to Cape Breton Island, as far as I'm concerned. I heard earlier tonight that young people went into the collieries and figured they would be there until they retired. They had a future ahead of them. In the last year and a half, their legs were cut off and they don't know what's going on now.

I think the government made a mess of it, and it's up to the federal government to fix it.

I want to thank you for your time.

The Chair: Thank you, Mr. Boutilier. Very succinct.

Madam Budden.

Ms. Edna Budden (Chairperson, United Families): My name is Edna Budden. I'm chairperson of the United Families. I would like to thank the committee for the opportunity to speak here today on Devco.

United Families is a group of miners' wives and was formed after the January 28 announcement of the federal government to withdraw from the coal industry in Cape Breton. Our effort was to have the federal government revisit the compensation package it offered to Devco workers. The original package of January 28 was inadequate in providing security to the Devco workers and their families.

• 1900

We have presented our case to bring awareness of the shortfalls in the compensation package to government officials here in Ottawa, in all political parties.

During the past 17 months we've made four trips to Ottawa to meet with members of government and four trips to Halifax on the provincial level. We've also been to the national Liberal caucus meetings in Halifax. We presented our case to the Cape Breton Regional Municipality and received full support from them, and also from the provincial legislature.

Our efforts have been constructive, respectful, and fair, despite our being very personally affected by this decision. We did present options to government that we believed would provide possibly a successful resolution to the Devco situation. We were given promises that work would be done, and as of this date I have not received any answer back on that.

I had a letter from Prime Minister Jean Chrétien on July 12. He specifically talked about the options we gave and said the results would be communicated directly to us as soon as they were completed. To date, I have not received any word back on that. At present, we have endured 17 months of tremendous stress. Right now, of course, we're all on pins and needles awaiting the decision of arbitration through Mr. Outhouse.

Our plea for changes to the Devco package is a plea from the heart. It's a plea from the heart of wives, of families who are suffering and who will suffer even more, and of the children and the generations to come who will bear the scars because of the loss of security of income to the Devco families.

[Translation]

Mr. Ghislain Fournier (Manicouagan, BQ): Mr. Chairman, I cannot hear the French interpretation.

[English]

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): I experience the same the other away around. Sometimes the microphones in the booth are quite far from the speaker and there may not be enough....

The Chair: Ghislain, you see what you've started? We're in the middle of a serious conversation. Don't ask for help where you shouldn't get it.

Voices: Oh, oh!

The Chair: I'm sorry, Madam Budden.

Ms. Edna Budden: It's okay.

Certainly the Cape Breton economy will suffer severe loss with the closure of Devco. Estimates are that combined with the spinoff job loss, the lost revenue will be approximately $300 million annually.

The unemployment rate in Cape Breton at present is twice the national average. To put Cape Breton on par with Halifax, an additional 16,000 jobs would have to be created. From unemployment, government certainly loses revenue in the form of direct taxes. They also have to spend money on social assistance and unemployment insurance benefits. Unemployment represents a loss of revenue for society. It causes increased physical and mental health problems.

We are already experiencing severe health problems because of the stress, and I've been told that the workforce of Devco is somewhere.... Right now 43% of people are off. I was a little upset to read in the Cape Breton Post that Mr. Shannon commented on the absentee rate of Devco being so high. I wonder why. These workers have been subjected to a tremendous amount of stress and they're certainly feeling the effects of it. I don't think it's fair just to put in the paper that it's absenteeism. It's a bad label on people who worked very hard but probably just couldn't take any more.

We've had many people suffer heart attacks and we have people who are being treated for mental stress-related problems. Ultimately, government will incur the costs in the long run through increased health care, protection from crime, social tensions, policing, and loss of human resources. Studies show that higher mortality rates exist among the unemployed. Then there are the incalculable costs, such as violence against a person generally and violence against women and children.

Right now we have inter-agencies in Cape Breton that have been in the paper and have expressed their concern about the increase they are experiencing with this particular problem.

• 1905

We have 1,200 families at present who are facing a loss of homes, jobs, secure income, medical plan benefits, and social problems. I know of some persons who have already had marriage breakups. People in my own group have had heart attacks. One of my own women became suicidal. Her marriage broke up. Another lady in my group has a 12-year-old child who has developed an eating disorder and has lost 15 pounds in three months because of the stress related to Devco. The child is now seeing a psychiatrist.

Certainly the problems are there. The stress has to come to an end. Children are supposed to grow up happy and become a productive part of society. They are entitled to a good education, which now may be elusive for some. The children will ultimately be the ones who will suffer as they watch their secure environment being turned upside down due to the stress in the home and the loss of income and security. We know that effects like that can last for generations to come.

Children are our future, and it is important that we protect their interests and look to ensuring that they have a stable environment to grow up in. We also have to look to the positive to change the economy of Cape Breton, to ensure that it is stable and diversified so that our children can become gainfully employed and only leave by choice, not by necessity.

There is an obligation here. We have an arbitration case that is going on, but we also have a social and moral issue here in leaving families and workers with dignity and no scars for other generations to bear.

I want to talk a little bit about Bill C-11, in particular the clause about section 17 on mine closing and production cutbacks. It certainly states there that in the original Devco act, all reasonable measures have been adopted by the corporation to ease any possible unemployment or economic hardship.

There's also talk in paragraph (a) of the timeframe in the overall plan. When the announcement of January 28, 1999, came out, the original date for exit was December 31, 2000. It looks now as if that date could be moved up, could be much earlier than was originally mandated. That raises a major concern for families and many who are facing a future of no work.

Devco is insistent that 500 jobs will be provided for in the private sector coal mining industry. We have yet to see anywhere that a potential buyer of Devco has guaranteed that they will employ and keep 500 people. There are certainly no guarantees in the privatization of Devco for the workers who have served under this crown-owned corporation for the better part of their lives. Serious concerns exist, and I believe questions have to be asked as to whether a private sector owner will continue to operate the Prince Mine.

We know there are problems that exist with gas and with geological fault problems with Kelly's Mountain. There is talk, and I have read in the newspapers, that Nova Scotia Power, the lone customer of Devco, is looking into using coke petroleum-based products to mix with coal for power generation. There are some serious questions here that have to be looked at. How long will Prince Mine continue to supply Nova Scotia Power? Will the private sector operator continue to operate Prince Mine or will the new owner just decide to ship coal in, as is being done today in Cape Breton?

It is important to take into consideration the serious unemployment problems in Cape Breton and also the health of the miners who have suffered injuries, lung problems due to exposure to gas, and other problems from working years underground. Most recently we've seen many—I believe the number is up around 40 now and it will probably rise to a higher figure—who have been exposed to high doses of radiation because of lack of safety standards at Devco. Devco was just slapped with a big fine in court for their lack of safety. With this radiation at this point in time, we don't know what health problems that will pose in the future for those people who have been exposed.

• 1910

We all know that when you go and look for employment, new employers sometimes require medicals, and we certainly know that older workers across this country are having a very difficult time obtaining employment. What we have in Cape Breton is that older workers are being thrown into a very serious unemployment situation, and their whole lives are being put into a turmoil.

Certainly Cape Breton cannot withstand the loss of revenue from Devco and its spinoff effect. We're looking at more. The steelworkers are looking at job cuts. When it's all combined with the unemployment rate we have at present, what we have is a very serious unemployment nightmare.

Job transition centres have been set up with Devco at the Devco mining building to help miners write resumés, but I have to question where the jobs are. You can write resumés until the cows come home, but if there are no jobs, what's the good of it?

I think the call centre that was just announced is a very welcome and needed employment project in Cape Breton, but I think there has to be some concern. It won't immediately be 900 jobs. There's definitely a concern.

I've read in the paper that the EDS company has employees who work in other areas within the corporation who are former Cape Bretoners who have requested to job transfer in. So what we'll have there are job transfers. We will not have new jobs for Cape Bretoners who are presently unemployed and on the street, and I think that has definitely to be looked at.

Those jobs will certainly benefit the young people who are walking the streets of Cape Breton, and they may be a second income for some wives of miners or whatnot, but it certainly will not provide the same wage scale that will allow Devco workers to maintain even the simple lifestyles they have had most of their lives.

We are in the midst of a new economy in Cape Breton and a transition period that is going to be very difficult, and I think you're looking at a timeframe of five to seven years before offshore oil and gas comes in.

We know we're no better off today than we were 31 years ago when Devco was mandated to mine coal and to provide economic development, but I think it is critical that we do not toss aside those individuals who have served under this crown corporation, and we must ensure they are treated in a fair and just manner, as other employees were.

Medical plan benefits are of vital importance to each and every family. I'm not going to get into that a whole lot. All I will say is that we did a survey, and I think 44% of the families responded to having a pre-existing medical condition that would exempt them from coverage under a private company.

We have families who have extremely high medical costs. I have with me—not for copy to give out, but to show—the receipts of medical costs for one family in Glace Bay who have three children who need drugs. It's $1,000 a month. These children will die if they do not have them.

I think that's something that is of definite concern and has to be looked at.

The Chair: You don't have to distribute that, but if you could just make one copy available to the clerk, the clerk will distribute it to everyone.

Ms. Edna Budden: All right.

The Chair: Because you've referred to it, I think it should be in the possession of all committee members.

I must ask you to wrap up, Madam.

Ms. Edna Budden: Okay. I'll wrap this up by commenting that Bill C-11...what I've spoken to previously is that I feel the government...there's not enough there to say they've lived up to paragraphs 17(4)(a) and (b) in the Devco act as far as easing economic hardship is concerned.

The other thing in Bill C-11 that I'm very upset about is clause 22, which deals with part I, schedule 1, where they're striking out the Cape Breton Development Corporation Act from the act. That is one of the options I asked government to research. I felt it could have provided an answer. Certainly Devco employees would be eligible to be put in the superannuation plan, and that, along with the bridge program, might have provided an answer and certainly alleviated a lot of problems that Devco widows suffer even today, because when a miner dies his pension dies with him. That claim would have medical plan benefits, spousal benefits, and benefits for children.

• 1915

It certainly had a lot of potential. I have yet to get word back on the research that was supposed to be done, and I was very upset to see that the government was striking it from the Public Service Superannuation Act.

So I ask that the Standing Committee on Natural Resources, and Devco, investigate and proceed to have an amendment to protect Devco workers from losing this option until it's been researched, until we get answers on qualifying to be part of the public service plan, and that the committee put forth amendments on clause 22—part 1, schedule 1 of the Public Service Superannuation Act—to ensure the Cape Breton Development Corporation is not struck from the act.

We also recommend that this committee see to it that the Government of Canada lives up to the commitment they made in the original Devco Act in 1967, paragraphs 17(4)(a) and (b). It hasn't been done to date, and I don't envision it happening overnight.

Thank you very much.

The Chair: Thank you, Madam.

Just before I go to our next witness, I'm having a quick perusal of the document you've handed us. It has the names of some people, and I'm not sure whether you would want us to have this. What I'm suggesting to the clerk, with your permission, is that we sanitize the copy before we give it out.

Ms. Edna Budden: I'd appreciate that, thank you.

The Chair: Some of you are wondering why I let Madam Budden go over the 10 minutes. I allowed the grace period that her colleagues around the table had accorded her by being brief.

Mayor Muise.

Mr. David Muise: Thank you very much, Mr. Chairman.

I appreciate the opportunity to make a presentation this evening to this committee, and I sincerely want to thank you and the members of Parliament who took the time to be here tonight.

I have been mayor of the Cape Breton Regional Municipality for about two and one-half years—probably the worst two and one-half years of my life, if not in the life of Cape Breton.

I am the son of a steelworker and my wife is the daughter of a coal miner, so I am familiar with the trials and tribulations of those two industries in Cape Breton.

Cape Breton Island is divided into four counties, and the Cape Breton Regional Municipality takes up approximately 2,600 square kilometres, or one of the entire counties of that island.

Within the Cape Breton Regional Municipality are many of the mining communities where at one time we probably had as many as 50 or 60 coal mines operating. We now have one, and its future is questionable.

The population at the last census was 117,000, so we are not a rural community. Unfortunately, because of the economic situation we find ourselves in, that population is declining by approximately 1,000 per year, and those 1,000 would be in the 22- to 30-year-old age range.

The official unemployment rate is 20%. The unofficial unemployment rate is much higher. There is only a 50% participation rate in the labour force, because honestly, Mr. Chairman, many people have just given up hope and they don't look for work any more.

As a consequence, the poverty rate in Cape Breton is 25%, and as a further consequence of that we have a very high rate of child poverty in Cape Breton. I'm not very proud of that.

We have a ratio of dependency on government transfers of approximately 60% in Cape Breton, whether it be for old age pension, Canada pension, disability pension, workers compensation, or what have you. We have an aging population.

These figures are all figures taken before the impact of the Cape Breton Development Corporation dissolution. So if those are true figures—and I believe they are—you can imagine the impact this undertaking is going to have on our community.

I want to read to you a quote from an article in The Social Worker magazine. This was written by a sister in the Order of Notre Dame who was involved in social services in Cape Breton, and she talked about the social significance of the Cape Breton mine closures. She says:

Does it mean anything to the rest of Canada that so many Canadians are suddenly bereft of means of subsistence because of an economic system which places unequal burdens on various parts of the country we call Canada? The fact is that the country as a whole will be affected by this catastrophe.

And sir, believe me it is a catastrophe.

• 1920

It's interesting to note that that article was written in 1967.

What does that tell me? That tells me, when I read paragraph 17(b) of the Cape Breton Development Corporation Act:

17.(4) Before closing or substantially reducing the production of coal from any coal mine operated by it, the Corporation shall

—mandatory, “shall”—

ensure that

(b) all reasonable measures have been adopted by the Corporation, either alone or in conjunction with the Government of Canada or of Nova Scotia or any agency of either of those governments, to reduce as far as possible any unemployment or economic hardship that can be expected to result from the closing or reduction in production.

That article I just quoted from was written in 1967, and this is 2000. The problem has not been solved, although a federal agency was mandated to solve it. That's what gives us such grave concern that you now want to strike that from the legislation. It's been said that the task can be taken over by ECBC, Enterprise Cape Breton Corporation, which was a spinoff of the Cape Breton Development Corporation. I'll have some comments about that in a minute.

I honestly don't believe all reasonable measures have been taken. Recently, in an article written by Dr. Donald Savoie, an economist from the University of Moncton who's very familiar to this government, he refers to what he calls the politics of impotence. Dr. Savoie maintains that Atlantic Canada lacks influence within the Canadian federation.

We had a meeting this week in Moncton where the four Atlantic premiers got together and talked about amalgamation as a single province. It's been talked about for many years.

So Dr. Savoie maintains we lack influence in the Canadian federation. That is a view I share, Mr. Chairman. I honestly believe Atlantic Canada has been forgotten. If the reality is that Atlantic Canada lacks influence and suffers from this political impotence, just imagine what one of the weakest economies in that region must feel like. That unfortunately is us, the Cape Breton Regional Municipality.

The Cape Breton coal industry has been studied to death. In 1966, in the Rand report, Justice Rand wrote:

In that section of Cape Breton, with over 8000 employees

There were 8,000 employees then in 1966.

of coal operators, ultimately influencing, through the position of coal in the economy, the entire Island, to be written off and allowed to sink into decay? Or must the governments concerned take such positive steps as will change the colour of things and replace an atmosphere of gloom and apprehension with one of hope and aspiration? To this, at least in this country, there can be only one answer; we cannot cut this Island off and Canada, acting with Nova Scotia, must, in my opinion, provide conditions to enable it to regain confidence and affirm its will to a new vitality.

So where has the government been for the last 30 years? If that was said in 1966 and led to the formation of the Cape Breton Development Corporation, where have they been?

It's been said that the task will now fall to Enterprise Cape Breton Corporation. My fear is that with the elimination of section 17, there goes the responsibility. There goes the requirement to take reasonable steps. More than likely, Cape Breton Enterprise Corporation will very easily disappear after that, and the federal government will be totally out of its responsibility to do anything for Cape Breton.

It's been said that as part of the package there will be money for the miners for severance packages. It's money they are entitled to. If they had worked for any other federal agency, they would have been in the Superannuation Act and received a pension. So tell me you're giving us money—you're giving the miners back the money they're owed, so that $111 million doesn't even figure in.

• 1925

The government is going to give us $68 million for economic development. When Devco closes, we're going to lose $65 million of purchasing power within our community—$65 million of family income is going to be gone in one year. So we're expected to turn our economy around, from a resource-based economy to a service-based economy, in one year with $68 million. I say the government put us in this situation and it's obliged to get us out of this situation.

The efforts of the federal Government of Canada over the last 30 years in economic development in Cape Breton have been a dismal failure. Every project—and I use the word “project” purposely, because it was project-based, short-term, and non-sustainable—only delayed the inevitable for 14 weeks, if that was the qualifying period for UI. If it took 18 weeks to qualify for UI, the programs were changed to 18 weeks. There was nothing permanent and nothing sustainable.

Efforts were made under the original ID division to get into things like fish farming and sheep farming—all dismal failures. They were probably good ideas at the time, but were certainly doomed to failure.

In this article written in 1966, Sister Thomas Marie said:

The social effects of a shutdown in industry are always serious. But in the case of our miners, they are particularly bad simply because there is no place for the miner to look for employment. There is no other industry to employ them.

That's what happened to our economy. We were resource-based, we were resource-dependent, and there was no diversification. There were no opportunities for our young people. They got an education and left.

You talk about an education. It's amazing what Sister Thomas wrote in her article. She said vocational training had been suggested and then:

“For what?” A school is not of much value if there is no market for the skills it will produce.

The day after Minister Goodale made the announcement in Cape Breton, there was a very emotional reaction by the coal miners to that report. Then-Premier Russell MacLellan bore the brunt of that. A very telling comment was made by one of the miners. He was in his late forties, was losing his job, and wasn't old enough to get a pension. He said, “I now have to compete with my son for a job. What am I going to do? Do I let my son get the job? Do I compete for the job? I'm 47 years old. I'm not ready to retire.”

Unfortunately, the coal miners were taught one skill set—coal mining. They have mechanical skills and electrical skills, but they're relative to the coal mining industry. Yes, there are some training opportunities, but in 2000 those training opportunities are IT. We're being offered call centres, software development, and those kinds of things. These are not jobs for coal miners. Thankfully, they're jobs for their children, given that opportunity. We appreciate that very much, but we have 1,200 coal miners who are facing unemployment in the very near future.

I'm the mayor of a municipality that has been hard hit socially and financially. It's the only municipality in Nova Scotia where property assessments decreased. We have a municipality where when businesses fail, they tear down their buildings so they don't have to pay taxes. This is what I'm faced with. I'm faced with a loss of $1.5 million directly in grants in lieu from the Cape Breton Development Corporation. I'm faced with coal miners losing their homes. I don't want to become a landlord. We are a service provider as a municipality; we are not a landlord, and I don't want to get into that business. We are going to have problems collecting our water rates and our taxes, and this will lead to other social problems.

A few months ago, we had to sever our contract with the Royal Canadian Mounted Police and go with an expanded regional police because the RCMP were too expensive for us. That is the type of decision we are faced with in the Cape Breton Regional Municipality.

So has the government kept its mandate? I don't think so. To now take that one last vestige of hope Cape Bretoners can hold onto, to put the government's feet to the fire, so to speak, to force them to help us in economic development—it's a sad day. As Mr. Boutilier said, the creation of the Cape Breton Development Corporation was a wonderful day for Cape Breton, and the dissolution of it will be a very black day for Cape Breton.

Thank you very much.

• 1930

The Chair: Thank you, Mayor Muise.

That doesn't leave us a lot of time for questions, but I'm going immediately to members for questions. However, with members I'm going to be a lot more strict than I've been with the witnesses. The five minutes you're allotted includes the response of the witness.

While we're beginning, some of the food that I said would be available is now being served. So if you're at the table, get up any time you like. Those of you who are going to come to the table a little later on might begin the process and we'll be able to move it to the next group.

Mr. Brent St. Denis: Nova Scotia Power, did you want them to speak?

The Chair: No, I want them on the next group. Thank you.

Mr. Chatters. Mr. Chatters is with the Canadian Alliance.

Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman. Welcome to the committee, ladies and gentlemen. I don't know where to go being that we're so short of time and we've covered so much territory.

But there is one striking contrast between the depressing picture you paint of your part of Canada and what we heard from the witnesses yesterday, particularly the minister himself and the former president and chairman of the board of Devco Corporation, who suggested that brighter days are coming, that Devco has been plagued with inept management and government interference for years and years and years and that it shall thrive under the private sector management. They suggested that Nova Scotia Power will need coal for the next 20 years, that the coal is there, and that the Prince Mine and the Donkin Mine under the new ownership will be able to provide that coal.

What I have to ask you is why do you reject that possibility? Why do you take such a negative position on the transfer of Devco to the private sector?

Mr. David Muise: If I may, a private operator will thrive. The prize in the piece is a contract to sell coal to Nova Scotia Power. If they get that, and they will, it doesn't say in the contract where the coal has to come from. The coal can come from Colombia, where they pay people 20¢ a day. The coal can come from Pennsylvania, Tennessee, or Brazil. It can come from anywhere.

First of all, let me say I'm absolutely amazed that somebody from Devco would admit that it's been mismanaged. The cry throughout the last 20 years has been that no, no, no, it's the union's fault, it's not management. Anyway, I'll leave that.

Devco will thrive, they're saying, as a private operator. But employing how many people? One hundred? Two hundred? Mechanized mining? There are 700 coal miners who are going to be on the street. We're concerned here about the people. We're not concerned here primarily for the success of an American coal company in Cape Breton. It was a private coal operator that got us into this situation in 1966 when they abandoned coal.

Mr. David Chatters: I have to cut you off because I'm so short of time.

You're assuming then that the successful bidder will be American on the basis that it appears that they've rejected all the local bids for Cape Breton.

Mr. David Muise: That's correct.

Mr. David Chatters: The community and Cape Bretoners in general would feel more confident, more comfortable, if in fact those local bidders had a legitimate chance at buying this?

Mr. David Muise: Certainly.

Mr. David Chatters: Okay.

The Chair: Mr. Chatters, thank you very much. That was very nice of you.

[Translation]

Mr. Fournier.

Mr. Ghislain Fournier: My first comment, even though we are short of time—

The Chair: Mr. Fournier, might I ask you to wait a moment until the witnesses are ready.

• 1935

We experience this sort of difficulty whenever Mr. Cardin occupies your chair. I wonder if it might be a relay problem. There is Mr. Fournier and there is Mr. Cardin and every time Mr. Cardin begins to speak, there seems to be a technical difficulty. When you occupied his chair, you had the same problem. I wonder if there is a connection? I do not know.

[English]

Are we ready?

[Translation]

Mr. Fournier.

Mr. Ghislain Fournier: Mr. Chairman, although we are running short of time, my first comment is for you because I did not quite understand what you meant in my regard.

My understanding was that something serious was happening and that we should not interrupt. I hope I misunderstood. If I grasped correctly what you were saying, I should state that I am indeed serious and that I am not simply here because I have nothing better to do. I hope I misunderstood. I came here to try to understand and if I do not understand then I must interrupt the person speaking and say so. It is my duty to say so and I hope that I misunderstood what you said.

The Chair: Yes, you did misunderstand.

Mr. Ghislain Fournier: I am glad. I feel better.

During your presentation, you witnesses said that the federal government has failed and that what is being proposed is absurd. That, in any case, was what I understood you to be saying. The federal government has not grasped the reality existing at the local level. How could the central government improve on its policy. How do you see this? What more can be done? In certain areas, such as your own, there is 25% unemployment. There is a part of my riding that has 80% unemployment. What is the difference between an area with 80% unemployment and your own area where there is 25% unemployment? I am trying to understand. You do have a good argument, but I am trying to understand how the federal government could have done more. I want you to know that I am not here to defend the policies of the federal government.

The Chair: Mr. Fournier, is your question of a general nature or is it addressed to someone in particular?

Mr. Ghislain Fournier: It is a question of a general nature addressed to whoever would answer. Mayor Muise said he was disappointed—

The Chair: Your question is then for Mayor Muise.

Mr. Ghislain Fournier: Yes.

[English]

The Chair: Mr. Muise.

Mr. David Muise: My apologies, sir. Although I am of Acadian extraction, my French is not good enough to answer you in French. Maybe next time it will be.

For 30 years what was happening with the Cape Breton Development Corporation is that every so many years there would be another bridge program to get people out of the coal mining industry, to put people on pensions. That seemed to be the concentration of the government, to get people out of the coal industry by pensions, when the original mandate was to get people out of the coal industry by creating other job opportunities. All that happened was they did some short-term projects, and they failed. So they went to bridge programming, where they took somebody who was 50 or 51 and topped up his pension until the Canada pension became available at age 60. Through created attrition they got as many people out of the coal mines as they could, instead of following the mandate to create other opportunities. That's what I mean by failure.

The Chair: Madame Dockrill.

• 1940

Mrs. Michelle Dockrill (Bras d'Or—Cape Breton, NDP): Thank you, Mr. Chair. I want to say thank you very much to the witnesses for coming, and certainly being from Cape Breton, we clearly understand and see on a regular basis what, especially the wives, were talking about.

I see another Cape Bretoner in the audience, Father Neville, who buried a 50-year-old miner this morning in New Waterford. So the reality is stacked for us in Cape Breton.

Mr. Muise, I'd like to ask you a question. I heard you in your presentation talk about the lack of commitment or success in terms of the efforts of the federal government in diversifying Cape Breton's economy. From the perspective of being the mayor, would you say that if the dissolution of Devco occurs, as the bill now sits before us today, there is a serious possibility that it will not devastate Cape Breton Island, but it will in fact destroy it, economically and socially?

Mr. David Muise: It certainly will be a blow from which we will not soon recover. I will give the government credit that there are some efforts of late to create some jobs, but my concern is that these jobs are not jobs for coal miners. These are jobs—and as I said, we are thankful for them—that are opportunities for other people. We have a corporation that puts many millions of dollars, probably $100 million a year, into the economy not only of Cape Breton county but I think of the railroad. There'd be no need for the railroad if they're not going to ship coal, and that certainly would have an island-wide effect because there are other users in the island. They purchase supplies right across the island, and even as far away as Ontario and into Europe they purchase mining equipment.

To use your word, “devastating”, it's a devastating blow to the municipality. It certainly is, more so to Cape Breton county than to the other counties on Cape Breton, and as I say, it's one that we would be a long time recovering from. In the past, the closures of collieries were softened by bridge programs and retirement programs, and then in the 1970s with the oil crisis and new mines opened, there was great renewed hope for the Cape Breton Development Corporation. So again, instead of looking for alternatives, all the eggs were put in one basket to develop new coal mines. So we have become dependent on that industry. And yes, the answer is it would be devastating.

The Chair: A minute and a half.

Mrs. Michelle Dockrill: Thank you, David. Supplementary to that, what you see presently in the bill, is it your belief that paragraph 17(4)(b) has to be retained to assist you as the mayor of the municipality in that hopeful recovery?

Mr. David Muise: Certainly, I think there has to be an ongoing commitment from the federal government to continue to assist us in economic development. I'm certainly not a fan of ECBC. I hope for better things from them. I don't think they've done much in the past, and they haven't had much of a budget over the last number of years. And while it may seem hard to believe to some members of Parliament from other parts of the country that we would turn our noses up at $68 million, you have to realize the devastating impact on a single-industry community when it shuts down. We are 117,000 people. This is not a little town that can close or whatever. It's certainly a large community. We would like to see that retained so that we certainly can work with the federal government. We will work through ECBC. We just want that safety net there.

The Chair: Thank you, Madam Dockrill and Mayor Muise.

There are a couple of government members who, I should tell you, have decided that what they want to do is give the opposition an opportunity to ask the majority of the questions, given the brevity of time.

So Mr. Reed and Mr. Provenzano are sharing a five-minute period.

Mr. Julian Reed (Halton, Lib.): Thanks very much, Mr. Chairman. I'll be as brief as I possibly can. It's very heart wrenching to hear the real stories of what's happening in going through a transition where obviously the denominator line is uncertainty at this particular time. That's something we have to address.

• 1945

In the brief time I have, Mr. Boutilier, I'd like to ask you this. I don't know if it passed by me or what, but you talked about other mining options that were available on Cape Breton.

Mr. Sam Boutilier: That's right.

Mr. Julian Reed: Have they been explored and then deemed significant enough to capitalize and so on?

Mr. Sam Boutilier: Mining gypsum has been going on for quite a while, and I know nickel is there. The gypsum has been mined, and that's the one down at Kelly's Mountain. They take a boat in and load it and they go with it. But it's not a big operation. It could be a big operation if they had the money to make it a big operation.

Mr. Julian Reed: Is it a large resource?

Mr. Sam Boutilier: From my knowledge, it is, yes.

Mr. Julian Reed: You also mentioned copper and nickel. Are those resources actively being—

Mr. Sam Boutilier: They're not actively being pursued, no, but they are there.

Mr. Julian Reed: You have a lot of good miners.

Mr. Sam Boutilier: I'll tell you.

Mr. Julian Reed: I'm just curious as to why they haven't.... I realize that metal prices in recent years have been depressed, so there wouldn't be a lot of incentive at this time, but they won't always stay that way.

Mr. Sam Boutilier: No. Mining coal was always the biggest option on Cape Breton Island, and the government put all their trust into that, I suppose. There's still lots of coal on the island. The Donkin mine is a gold mine. There's that much coal there you couldn't count the tonnes. It was flooded and left. If private industry goes in there and pumps it out and starts pumping coal up to Nova Scotia Power.... As I said, there's no trouble with foreign markets. Devco always had a good case with the foreign markets. They could always ship their coal. It was always good coal to ship. If a private operator took it over—and hopefully it would be local—then I think they could really make a go of it, plus the other options there on the gypsum, nickel, and copper.

Mr. Julian Reed: Thank you.

The Chair: I'm going to let Mr. Provenzano use up the last two minutes.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): I have a question that's sort of along the same lines, Mr. Chair. Obviously, these difficulties have been presenting themselves for quite some time. If there are possible opportunities such as have been described, I was just wondering what efforts have been made at the local level to explore these opportunities in some kind of professional way.

Mr. Sam Boutilier: To my knowledge, none other than the gypsum. They ran into trouble on the mountain a way back because of an Indian burial ground. I'm not sure, but I think they worked around that. I don't know if they're still mining. There hasn't been too much thought put into it other than for coal. That's about it.

Mr. David Muise: Gypsum is surface mining. Cape Breton coal is underground, long-wall mining, and there's quite a difference. As you said, the prices for the other minerals are depressed.

We hold out hope for offshore gas, but the boundary between Newfoundland and Cape Breton Island remains unresolved. We've been waiting two years for an arbitrator to be appointed to settle that. That's not going to solve our problems. That's 20 years away.

We are working daily in Cape Breton to find solutions for our economic problem. Our economy has been devastated. We do not have the financial resources to do it ourselves, so we are looking to attract private industry. But we also need the help of the federal and provincial governments.

The Chair: Thank you. I'm going to give Mr. Mancini, who is not a member of the committee but who has come precisely for this discussion, an opportunity to ask a question.

Mr. Peter Mancini (Sydney—Victoria, NDP): Did you say a question?

The Chair: Sure. You're going to use up about two minutes.

Mr. Peter Mancini: I'll be brief. These are important questions.

• 1950

First of all, welcome, everybody. You all know me, so I won't spend a lot of time on saying hello.

I'll go first to Mr. Boutilier. Mr. Boutilier, Bill C-11 provides for a new corporation to be struck. The purpose of that corporation is contained in proposed section 18, for the most part. Essentially, it will be the administration of pension arrangements for the benefit of those people who are retired. Would it be the opinion of your organization that the Devco Pensioners association should be involved in the administration of that pension by having a member on the board of directors of the new corporation?

Mr. Sam Boutilier: Absolutely. As a matter of fact, we had applied. We had 50 signatures, which you're supposed to have, and we were turned down. They said that we would have no say and that it would just be foolish to sit on the board.

Mr. Peter Mancini: So at this point, since the government is drafting a new bill, it would be welcomed by you if it were to be amended so that one of the members of the new board of directors would be someone from your organization.

Mr. Sam Boutilier: We would really look forward to that.

Mr. Peter Mancini: I just want to be clear. You mentioned domestic coal for Devco retirees and widows. Would it be your opinion and the opinion of your organization that any sale would provide for the continuation of coal to those people who have become dependent on it at the current rates?

Mr. Sam Boutilier: Absolutely.

Mr. Peter Mancini: Okay.

Mr. Sam Boutilier: There's one other item, if I could interject here, which is the medical benefits for our pensioners. We have no idea exactly what's going to happen when Devco closes. We have some people who are 58 years old and on pension, and they go until they're 65 before Pharmacare kicks in. We have no idea whether these benefits are or are not going to be paid. I don't think it's right to leave people hanging like that.

Mr. Peter Mancini: My next question is for the mayor. David, you're a lawyer. I know, I used to fight against you in court.

You made reference to section 17 of the act, and you used the word “shall”, that the corporation shall ensure that all reasonable measures have been adopted by the corporation. As we learned in law school, it isn't “may” or “might”, it's “shall”. In your opinion, is the Government of Canada breaching its own legislation with the current package?

Mr. David Muise: Yes.

The Chair: Do you have a last question there, Mr. Mancini, since you're on a roll.

Mr. Peter Mancini: Do I get one more?

The Chair: Go ahead.

Mr. Peter Mancini: Yesterday I asked Mr. Shannon whether or not the contract with Nova Scotia Power was the primary asset for sale in this arrangement, and he said it was not. He said that Prince Mine was. You referred to that contract as the prize. You would disagree, then, with Mr. Shannon.

Mr. David Muise: If I were a bidder, that's what I'd want.

If I could just make one quick comment about the assets, the Cape Breton Regional Municipality has approached the government about the disposal of the assets. As the federal government divests the Sydney Marine Terminal, as it's called, the fisheries building and harbour bottom itself in the city of Sydney, we have determined to create a port authority. We have made application to the Province of Nova Scotia for the Sydney Steel port assets and to the federal government for the Cape Breton Development Corporation port assets. We would like to work with any potential new owner on a harbour development plan. Mr. Reed asked, what are you doing down there to help yourselves? I think that's one of the things we are doing.

Certainly, we were told as well that Devco was being sold as a package, that the assets weren't going to be hived off.

Mr. Peter Mancini: I have a final question for either Faith or Kathy. You quoted tonight from a written text. You have been in Ottawa before and presented a package to various members of Parliament. I would suspect that some of what you've read tonight comes from that document. Would you be willing to make that document available to the members of the committee if they so wish? Thank you.

Thank you, Mr. Chair.

The Chair: We'll do better than that, Mr. Mancini. We'll make copies and distribute it. It'll be read into the record.

Mr. Peter Mancini: Mr. Chairman, I know there are portions in their presentation, but I don't think they have the original document with them. They can make it available.

The Chair: If you have the original document, you can send it to the clerk, and the clerk will make sure that all members get it.

On behalf of all committee members, I want to thank all of you. I know that you've been very diligent and very forthright in what you had to say. Obviously you're very committed to an issue that's yours. I thank you for giving us a flavour of how you see the issue and how it affects you.

• 1955

Mr. David Muise: Would the chair permit just one quick question? Is it the intention of this committee to hold any hearings in Cape Breton?

The Chair: The committee hasn't looked at that option yet, but as I said when we began, the committee has turned into a legislative committee. It is normally a standing committee. It has a series of other issues. The committee has not yet looked at the value of travelling, because we are looking at the legislation itself. So with all due respect, the reason we invited you here is that we have an opportunity to take a look at the legislation. That's why in my opening remarks I asked you if you could focus on items specific to the legislation.

Mr. David Muise: Thank you very much.

The Chair: Thank you, Mr. Mayor and witnesses.

I'm going to suspend for about two minutes while we bring the other witnesses forward to make themselves comfortable at the table.

• 1956

• 2002

The Chair: I call the meeting back to order.

Excuse me. While everyone is welcome to stay here, especially the people who are here as observers—and anybody who's not at the table is an observer—I would ask you to maintain a sense of decorum and quiet, even while you're eating.

We have with us a second group, and we've met some of these people already. We with us Mr. Kevin McNamara, the president of the Cape Breton District Labour Council; Mr. Kevin Murphy, vice-president of Cape Breton Miners Development Co-operative Ltd.; and Cliff Murphy from the Cape Breton Island Building and Construction Trades Council.

Mr. John Hugh Edwards (Adviser, Cape Breton Island Building and Construction Trades Council): I'm John Hugh Edwards, and I'll be making the presentation, along with our legal counsel, Blaise MacDonald.

The Chair: You're accompanying. Okay, so it's John Hugh Edwards—

Mr. John Hugh Edwards: And Mr. MacDonald.

The Chair: Where's Mr. MacDonald? Okay. If you'd like to sit a little closer, that's fine too. It's not a problem, except I'm only going to ask one of you to speak.

And I'm sorry, to the people from Nova Scotia Power Inc. We were anticipating you a little earlier on, but I had to make some changes, and that's why I didn't ask you to speak when we first came along. I'm glad you're here. You are Mr. Murray Coolican, and I think you have Mr. Peter Kinnear with you as well. You might want to sit closer to him. That way if you have to confer, that's fine, but I'm going to rely on only one of you to make the presentation.

Never let it be said that even in serious moments, because this committee has had some serious moments.... One of our colleagues was accused of various things yesterday, but a fortune cookie vindicated him. He is never bitter, deceptive, or petty, so he must be a Liberal.

Voices: Oh, oh!

The Chair: Gentlemen, I know you were here when I gave my introduction to the other group. Let me repeat it for the record, please. I'm going to accord each and every one of you about ten minutes—please don't go beyond that—and then we'll go into questions and answers. The question-and-answer session is often most productive for committee members. It gives them an opportunity to focus on specific issues.

• 2005

I know this is an issue that's most important to you. I don't want to interfere with your presentation. Keep in mind that the committee is charged with looking at a piece of legislation. If you can focus committee members' attention on specific articles that are of importance to you, that would be most, most helpful. However, do not let that constrain you. If you feel you have other issues you want to deal with, provided you stay within that timeframe, everything will be just fine.

Mr. Murray Coolican (Vice-President, Public Affairs, Nova Scotia Power Inc.): Can I just make a quick point, Mr. Chairman?

The Chair: Yes.

Mr. Murray Coolican: I have a bad back, so if in the middle of somebody else's testimony I get up to do some exercises outside, there's no disrespect intended.

The Chair: We understand.

Mr. Murray Coolican: If I continue without the exercise, it will be a scream, not just getting up in the middle.

Thank you.

The Chair: We understand, and you don't necessarily have to sit there while others are making their presentations. If you'd like to be the last one up, I'll take that into consideration. Okay? Thank you, Mr. Coolican.

Let me go to Mr. Kevin Murphy first.

Mr. Kevin Murphy (Vice-President, Cape Breton Miners Development Co-operative Ltd.): Mr. Chairman and committee members, my name is Kevin Murphy. I live in Reserve Mines, Cape Breton, and have been a coal miner for eighteen years. I thank you for your invitation, albeit on short notice, to make a presentation to your committee, and I hope it will contribute to the decision-making process.

I'm here this evening as a representation of the Cape Breton Miners Development Co-operative Limited. The cooperative consists of junior miners who do not qualify for jobs or a pension in the future coal industry under any current plan proposed by the federal government or the Cape Breton Development Corporation.

The cooperative was formed in 1998 and has been consistent in its efforts to have an equity position in the mining of coal in Cape Breton. It was formed because its members believe there's a long-term, viable future for coal mining in Cape Breton and that employee participation in ownership will be an important ingredient to ensure coal mining success in Cape Breton.

Since the founding of the co-op, its members have felt that, consistent with previous practice, the federal government, as part of its privatization plans, would and should have given first opportunity to purchase Devco assets to employees and management. Not only did this not happen, but we found it impossible to access any assistance from our government, either material or in the form of guidance. Instead the co-op was merely permitted to make a bid for the entire Devco operation, in direct competition with private investors. Our bid was rejected on the questionable basis of our not having hired a management team, and we were not even included on the short list of investors for further negotiations.

Undeterred by this rejection and committed to participating in the coal industry in Cape Breton, our co-op searched for other opportunities and other investors. Fortunately we have been able to enter into an agreement with Donkin Resources Limited, also known as DRL, chaired by Mr. Steve Farrell, who has been trying since 1997 to open the Donkin Mine in Cape Breton. In the agreement with DRL, the co-op would hold an equity position in the mine and be represented on the board of directors. DRL would benefit from having a major investor and a stable labour force committed to the project.

The miners co-op has also become aware of the possibility of reopening the Phalen Colliery, which closed in December 1999. We feel that this undertaking, along with the Donkin project, can be handled by our organization.

A number of key factors convince us of the viability of our projects. We have at least fifty years of coal reserves at Donkin Mine and at least five years of coal reserves at the top end of Phalen. We have a readily accessible, trained, and experienced workforce. We will be supported by a traditional coal mining community. There is a local market with Nova Scotia Power for 1.4 million tonnes, after Prince Colliery and the output of strip mines are taken into account, and an offshore spot market for 1 million tonnes a year.

• 2010

Committee members should note that the numbers regarding Donkin Mine have been verified by independent engineers and financial consultants. We are anxious to have an opportunity to do the same formal testing process for Phalen Colliery.

The Donkin plan, which I would like to submit to the committee and have printed....

The Chair: Yes, we'll take it. It's only in English, right?

Mr. Kevin Murphy: It's only in English, yes.

The Chair: Okay. We'll take it.

Mr. Kevin Murphy: You will take it and you'll have it printed?

The Chair: We'll read it into the record and we'll get it translated so that all of our colleagues around the table will have it.

Mr. Kevin Murphy: Very good. Who do I give this to?

The Chair: The clerk will take it.

Mr. Kevin Murphy: Thank you.

The Donkin plan includes an underground coal mine, a coal wash plant, and, in the enhanced plan, a thermal power plant. The mine is expected to produce 1.2 million tonnes a year, with a peak workforce of 180 employees. The coal wash plant will be state of the art, with no discharge. The 20-year capital cost will be $143 million, and the cashflow requirement will be $70 million. These numbers do not include the thermal power plant.

Projections by professional consultants hired by DRL point to a required increase in electrical generating capacity in Nova Scotia of 20% by 2008. With the expected use of natural gas, in this same time the combined industry will realize a drop of 20% in greenhouse gas emissions and a drop of 10% below cap in SO₂ emissions.

The initial financing plan has been verified by independent consultants, in reference to both engineering and accounting. The initial equity investment required will be $10 million, of which at least $3 million will be invested by the miners co-op. This permits sufficient leverage for working capital, long-term financing, and unforeseen operating problems.

Of interest to those in public life may be the expected spending by the proposed company. It is expected that in a 20-year period, the Donkin project alone will spend $600.8 million in Nova Scotia and a further $135 million in Canada. Direct taxes to be paid as a result of the project will be $259.3 million. This does not include taxes and spending by contractors or spinoff jobs.

Another issue to be considered is the unanswered question as to whether any off-island company intends to develop Donkin Mine. Because of the claims to privacy by Devco, no one knows the answer to this question, yet we can state plainly that the project will be dead without a solid local market, a modern labour agreement, and public support by the Cape Breton community.

Legislators must understand that no investors will become involved in the mining industry if they are to be saddled with the cumbersome and onerous contracts that now exist with the labour unions. Especially with the miners cooperative, there must be freedom to enter into a new labour agreement with whatever union is chosen to represent employees.

The Donkin project, as outlined here, is a long-term commitment by local people, not a quick flip. Employee participation in ownership historically contributes to lower cost, increased production, and solid safety practices. Lower costs mean that Donkin will be the last to be knocked out of the market. For these reasons, we believe that local ownership of Donkin with employee participation in ownership is to be preferred over off-island investment. We believe the result of continued lack of confidence in the coal industry by government drastically affects the local population and inevitably results in the death of the industry.

The Cape Breton Miners Development Co-operative Limited believes strongly in the future of the coal industry on our island. Sadly, however, our efforts to realize our very positive goals for our people have been hampered by the questionable process that has been used, and is still being used, to privatize the Cape Breton Development Corporation. The process to sell Devco has not been open and transparent. We do not know the status of the sale process or what is in fact being sold.

• 2015

Despite a clear message to the board of directors, the Minister of Natural Resources, and Nesbitt Burns that a group of coal miners was interested in purchasing the assets of Devco, no effort was made to investigate this possibility. The miners were unfairly placed in the same category as rich international firms and dropped from the short list of bidders under the pretext that they had no management skills. These skills can be easily purchased, as other producer co-ops have done in the past.

We have been following recent events and we believe a foreign buyer is interested in only Prince Mine and the coal-handling infrastructure, including the shipping and receiving piers. We believe every effort is being made to discourage a Nova Scotia company from opening the Donkin Mine. This is being done for two reasons. One is that the coal-shipping pier and other infrastructure will have little value to a foreign buyer of Devco if there is no need to import coal. A competitor in the Nova Scotia coal industry will not be welcomed by a foreign buyer.

Our fear is that the Government of Canada is going to maximize their return on the Devco sale by stopping development of the Donkin Mine, eliminating competition. At the same time, our jobs will be sold to a foreign country.

The Miners Development Co-operative knows that all the coal required to supply the Nova Scotia market can be mined in Nova Scotia. This coal can be mined economically and the power generation industry in Nova Scotia can meet or exceed environmental guidelines. We are willing to invest in our future. The Government of Canada appears to be intent on selling it. Thank you.

The Chair: Thank you very much, Mr. Murphy.

We'll go to Mr. McNamara.

Mr. Kevin McNamara (President, Cape Breton District Labour Council): Mr. Chairman and honourable members of Parliament, my name is Kevin McNamara and I'm president of the Cape Breton Labour Council in Sydney, Nova Scotia. I've been employed in the workforce for 36 years.

With regard to this Bill C-11, in 1968, I marched in Sydney on Black Friday with the closure of Sydney Steel. In 1969, Tom Kent was closing Devco. I was then an employee of the S & L Railway. On July 1, 1969, because of Bill C-17, where we had to have jobs, I went to work at the coke ovens in Sydney, Nova Scotia. I worked there until 1976. In 1977 I went back to college.

I was hoping Senator Buchanan might be here because I did my business degree at Saint Francis Xavier and Premier John Buchanan at the time was there. As far as he was concerned, offshore gas and oil in 1980 was going to be Nova Scotia's saviour. As you people know, with the last number of premiers we had, they gave it away. We might end up with maybe 2%.

With regard to Bill C-17, they had to give me a job. I was only employed since 1964. In 1969, they told me to go work at the coke ovens at Sydney Steel. I think at that time Tom Kent was closing down the railroad. There were 20 of us who went to the coke ovens to work. By 1971, as was already mentioned here today, with the increase in the oil prices, coal was rejuvenated again. The railroad didn't close and the mines kept producing.

Mr. Chairman, I'd like to go on record as saying that I'm really disappointed that I didn't have the time to prepare my statement or to prepare a brief to pass around here because I was notified at 11 o'clock on Monday morning. I work shift work. I had to take tonight off. I said, “Who's going to pay me?” They said, “We don't look after your salary.” So it was that important for me to come here to make this presentation that I took vacation time to come. I think somebody already mentioned that the room should go to Sydney. I think it would be an excellent idea. At least then we would have more time to prepare a better statement.

• 2020

Anyway, as far as I'm concerned, Bill C-11 is the demise of the federal government's economic responsibility for Cape Breton Island. The federal government has been responsible for the crown corporation for, I would say, over 32 years. It has the responsibility to oversee employment and economic growth in Cape Breton Island in Nova Scotia, which is one of the have-not provinces of Canada.

Cape Breton presents a unique set of challenges for economic revitalization from 300 years of dependency on the coal industry. As was stated here earlier, people were miners; they were not trained for anything else. I was very fortunate that I was able to get out of the steel industry today. As you know, and as my learned friend Mayor Muise said, Sydney Steel is on the way out.

So we are at a state in Cape Breton Island where there's no employment. In order to sustain economic growth, to pay taxes, have good working conditions, we need employment, and we don't have it. Myself, I am now a registered social worker in the province of Nova Scotia. What was given to you today by my colleagues was the tip of the iceberg with what's going to happen in Cape Breton Island with regard to suicides, alcohol problems, marriage break-ups.

I did a sociology paper for Professor John Nicholson in 1980—the sociology of the family. If I had had the time, I would have gone looking for it. What I wrote about with regard to the high unemployment rates in Cape Breton Island is what's happening today.

I also have a paper at home that was sent to the premier of Nova Scotia in 1951. In 1951 there were 5,200 people working at the steel plant. Today there are 400. If there were 5,200 at the steel plant, there were at least 6,000 coal miners in Cape Breton Island. We don't have that today. Those jobs are gone.

With this Bill C-11, if the government throws it out and Nova Scotia Power...and I don't know if they're coming here today, but they have the right to purchase coal anywhere they want. Under Bill C-17, they have to buy Cape Breton coal, produced by Cape Breton people.

We have, I was told, two million tonnes of coal on Cape Breton Island. I don't care who mines it, but I want jobs for Cape Bretoners. Being a member of the Cape Breton District Labour Council, I can tell you that this is all we want, for people to sustain a fine quality of life in Cape Breton Island.

Mr. Chairman is not here, but I think he would enjoy Cape Breton Island if he ever came down for a visit.

I have a few suggestions that I would like to present to this committee. One is a federal government department on Cape Breton Island. The Royal Bank does not want student loans. Give it to us. Let us run it. We can have people in Cape Breton Island who are qualified to look after all the student loans in Canada. There's $100 million that could be invested in Cape Breton Island. Give it to us. You're not taking it from Ottawa. You're not taking it from New Brunswick or P.E.I. Give it to Cape Breton. Let us do that. Then you're doing something to create employment in Cape Breton Island.

Develop training programs at UCCB, Marconi campus, and the coast guard college. Never mind these people who are trying to get in on the $88 million to create employment for Devco workers at $6 or $7 an hour. Give it to the companies and the colleges that are there today.

• 2025

I have a daughter in university. There are a couple of university students here. Today, the president of the student union, Mr. MacKinnon, is here. And Mr. Gillis is here. If they had known, they probably would have been here presenting something too.

Develop a cohesive energy plan using the coal and natural gas of Cape Breton Island. Let Cape Breton go and get our own offshore gas and oil. Never mind John Hamm. Let Cape Breton Island do it themselves with the support of the federal government, and then we will get the support of the provincial government, because with the jobs that would be created, you people would get taxes and the provincial government would get taxes.

As I said in 1950, with the money that came out of Cape Breton Island for taxes for federal and provincial governments, your wives didn't have to worry about anything else.

Open Donkin Mine. That's something you have to do. I don't know how you're going to do it, but we need the money to invest in the opening of Donkin Mine, because there are so many coal miners who are caught between an age where, as Mr. Murphy said, they're 47 years of age. If you go back 5 or 10 years ago, at 47, you were at an age where you were unemployable. This is where these guys are today. But you put them in the pit and they'll work until they're 60. Give them that opportunity to be able to work.

These are just notes that I drafted up, because I never had a chance to put it all together. As I stated, Newfoundland has the income tax office, Veteran Affairs is in P.E.I., so give us the student loan business and let us deal with it. Maybe then we could give it to the students at a cheaper rate too.

I certainly ask this committee not to go with Bill C-11, to stay with the Bill C-11 that our prime minister voted for along with Allan MacEachen. This has to go for Cape Breton Island's economic development. So keep it in Cape Breton, please, and thank you.

The Vice-Chair (Mr. Julian Reed): Thank you very much, Mr. McNamara, for your presentation.

Before we proceed to questions, I would like—

An hon. member: We have another witness, Mr. Chair.

The Vice-Chair (Mr. Julian Reed): No, I don't believe Mr.—

A voice: We have Mr. Murphy from the Cape Breton Island Building and Construction Trades Council?

The Vice-Chair (Mr. Julian Reed): You're welcome to make a statement if you'd like, but I was advised by the chair that Mr. Kevin Murphy and Mr. McNamara would be the only two presenters.

A voice: I believe we have the Nova Scotia Power Corporation here, and the building trades.

Mr. Kevin McNamara: Joe made a mistake, sir. Take it from a Cape Bretoner.

The Vice-Chair (Mr. Julian Reed): Thanks very much. I want to inform you if I can that I don't know whether the chairman has ever been to Cape Breton, but I've had the privilege of travelling the Cabot Trail three times.

We'll go now then to Mr. Cliff Murphy.

A voice: Mr. Edwards will speak first on his behalf.

The Vice-Chair (Mr. Julian Reed): Mr. Edwards. Thank you very much.

Mr. John Hugh Edwards: Mr. Chairman, my name is John Hugh Edwards. I work for St. Francis Xavier University in Cape Breton, Nova Scotia, and I'm an adviser to the Cape Breton Building and Construction Trades Council.

Also with us is Mr. Cliff Murphy, who is the president of the Building and Construction Trades Council, and our legal counsel, Blaise MacDonald. So when we get to questions, all three of us could possibly answer questions for you.

Let me just say that along with ourselves, we brought a box full of documentation that would include copies of a proposal we have for older worker adjustment in the construction industry, copies of a video that was produced around the situation with construction workers in Cape Breton at the present time, an executive summary of that report, revised financial figures based on a report that was written in 1997, and some new elements of the proposal that were not available in 1997.

• 2030

I'd like to apologize for the fact that all of these documents are not translated into French from the original English. We had confirmation we'd be appearing before you at 5:30 p.m. Atlantic time yesterday, so there wasn't the possibility of translation.

Before I begin to make our particular presentation, I would also like to reinforce the comments made by many of my fellow Cape Bretoners who are here suggesting...at least I believe the legislation you're dealing with here in Bill C-11 is probably the most important piece of legislation affecting Cape Breton since the legislation that C-11 is meant to dissolve, which is the act to incorporate the Cape Breton Development Corporation.

That being said, Mr. Chairman, you have probably about 15 of those 117,000 Cape Bretoners that Mayor Muise talked about here. I think that's an unfair advantage. I think for this committee to truly understand what enactment of Bill C-11 means, this committee has to go to Cape Breton and talk to a broader range of Cape Bretoners than are available to you here.

That being said, let me say this. The Cape Breton Island Building and Construction Trades Council represents about 3,200 workers in the construction industry in Cape Breton. None of those workers at present works in the coal industry, but we feel we have some particular interests in terms of Bill C-11, and I would like to refer you to the sections of the act that C-11 dissolves that are not referenced in the new act, except to say that they are not included. Those references would be subsection 17(1) and paragraph 17(4)(b) in the previous act.

If I can read what they say, to make sure we all remember from 1967, a piece of subsection 17(1) says:

...the plan shall take into account progress in providing employment outside the coal producing industry and in broadening the base of the economy of Cape Breton Island.

Included in paragraph 17(4)(b) is that:

All reasonable measures should be adopted by the Corporation, either alone or in conjunction with the Government of Canada or of Nova Scotia or any agency of either of those governments, to reduce as far as possible any unemployment or economic hardship that can be expected to result from the closing or reduction in production.

Both of those sections are missing from Bill C-11. Both of those sections are crucial for the future of Cape Breton. And both of those sections have direct consequences for workers in the construction industry, past and present.

Let me explain that, Mr. Chairman.

Certainly, in subsection 17(1), where we talk about providing employment outside the coal industry, that cohort of the construction workers presently in the industry between the ages of 55 and 64 years were strongly encouraged to enter the construction industry by the federal government as part of the policy initiatives flowing from the Cape Breton Development Corporation Act—that very section in fact.

In the 1960s and 1970s, government optimistically suggested to young workers that through government initiatives to accomplish the twin goals of closing the coal industry and revitalizing and diversifying the Cape Breton economy, opportunities would be created in the construction industry that would provide lifelong steady employment for skilled tradesmen. At this same time, government educational institutions for trades were blossoming around Cape Breton and other parts of the country, and young people were encouraged strongly to enter the construction industry.

These initiatives failed for reasons that were discussed in the first part of this evening's hearings. I'd like an opportunity later to answer some of those questions again, if I could. Why the initiatives failed is maybe a debatable question, but we know the initiatives failed, and as a consequence construction workers in Cape Breton presently face extremely high levels of unemployment.

Before this government passes legislation that changes its responsibilities fundamentally for economic renewal in Cape Breton, it should consider the results of its previous efforts and make provision to undo some of the direct results of its policy initiatives.

• 2035

The second reason the Cape Breton Island Building and Construction Trades Council wanted to appear before you this evening is that for many years, the council has been advocating for an older worker adjustment program. Previous government initiatives in this area—ILAP, POWA, and others—were not applicable to construction workers, and at present there is no national program for older worker adjustment. In fact, we're the only country in the G-9 nations that doesn't have an older workers program.

In May 1997, the council presented government with a comprehensive plan to provide a bridging income and an opportunity for community volunteering for construction workers between the ages of 55 and 64 years. We have a copy of that report for all the members of this committee.

This program would have an impact on the deliberations of this standing committee on Bill C-11 in the following ways.

By removing with dignity several hundred workers from the construction industry, younger workers will have a greater ability to move from apprenticeship to journeyman status in the industry. With this program in place, an avenue would be open to present Devco workers who have trades training—electricians, mechanics, and others—to join the appropriate construction industry unions that are now glutted and would provide part of a comprehensive program, as suggested in subsection 17(1) and paragraph 17(4)(b) of the Devco act, for economic renewal in Cape Breton. It's the kind of comprehensive planning and strategy that we haven't seen from previous governments, and we certainly don't see it from this one.

Since originally presenting the proposal for older worker adjustment in the construction industry in Cape Breton in May 1997, we have continued to work on improving that proposal. At present, all building trades councils in the nation have agreed not to seek a similar program if a demonstration program in Cape Breton were instituted and funded.

The program has become one of the seven points included in the Canadian building trades proposal to fix the present EI program and in a collective agreement in Cape Breton between the industry and workers, signed in February 2000. That contract includes language that will see employers and employees contribute 30¢ per hour as industry partners to government for such an older worker adjustment program.

We can look at past years and say the average person hours worked per year by the workers represented by the Cape Breton Building and Construction Trades Council is about 1.5 million hours per year. These workers and their employers are willing to contribute 30¢ an hour on 1.5 million hours per year for such an older workers program.

We think that's significant partnership, which is what this government requires these days for economic renewal.

We have this comprehensive program for older worker adjustment. We have not been successful in luring government into partnership with the industry and with the workers on this, and we'd like to put this forward as part of a plan for economic renewal and diversification in Cape Breton that expresses on behalf of the construction workers their solidarity with the workers in the coal industry and their solidarity with a government that would be willing to work hand in glove with the people of Cape Breton to solve our problems.

So that being said, I think I would leave any questions on the particular technical aspects of the program to the members present.

Thank you very much, Mr. Chair.

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. Edwards.

Now I'm going to remind the committee before we hear from Mr. Coolican that the questioning is going to have to be concise and brief. By the time we've heard from Mr. Coolican, we'll know exactly how much time we have left.

Mr. Murray Coolican, please.

Mr. Murray Coolican: Thank you very much, Mr. Chairman.

My name is Murray Coolican. I'm vice-president of public affairs for Nova Scotia Power. With me this evening is Peter Kinnear, our director of government relations and economic development.

Nova Scotia Power appreciates the opportunity to attend the committee's discussion this evening and provide the committee with background on our company and its long relationship to the coal industry of Nova Scotia.

• 2040

Our company's mission is to be the customers' choice in energy and services. Nova Scotia Power is guided by this mission on a daily basis, as we interact with our customers, our employees, and our shareholders. We are a regulated, investor-owned subsidiary of Nova Scotia Power Holdings Incorporated, and we provide electricity to some 440,000 customers within the province of Nova Scotia. Our company operates 2,200 megawatts of generation capacity and maintains and operates 30,000 kilometres of transmission and distribution line.

Approximately 90% of the electricity produced by Nova Scotia Power is generated at thermal-electric generating stations, with the remaining 10% derived from hydro-electric stations. Of the 90% that is generated at thermal stations, 80% comes from coal-fire boilers and 10% from oil.

Nova Scotia Power is also a major employer in Cape Breton, with three large generating stations, and our regional transmission and distribution workforce, which is based in Sydney.

We currently operate a total of five thermal generating stations. Our largest is Lingan and our newest is Point Aconi, both in Cape Breton. Farther south, at the Strait of Canso, also in Cape Breton, we operate our Point Tupper generating station. On the Northumberland Strait at Trenton, we have our second-largest generating facility. These four generating stations are primarily fired by coal.

Our Tufts Cove generating station, which is in the Halifax Regional Municipality, is currently oil-fired. We're in the process now of converting Tufts Cove in Halifax to gas, and we anticipate the arrival of natural gas before the end of the year. It's interesting to note that our Tufts Cove generating station will be the largest customer for natural gas in the province.

We support Bill C-11 in principle, as we believe it offers the best prospect of maintaining a coal industry in Cape Breton. Our view is that the mines in Cape Breton can be operated so the price of coal is competitive with similar operations elsewhere in North America and the world. By moving to a world-competitive approach, privatized operations will certainly be able to compete effectively for our business over the long haul.

Our support for Bill C-11 is partially based on our own corporate history and experience. We strongly believe that privatization of Nova Scotia Power has served the public interest. By adopting an increasingly business-like approach, virtually all our corporate performance indicators have improved. We were privatized in 1992. Prior to that time, the company was a provincial crown corporation. Since privatization, we have focused on becoming a highly competitive source of energy for Nova Scotia.

I want to discuss with you our achievements in the three critical areas of improved safety, competitive and stable electricity prices, and improved reliability. Two of these major corporate objectives are related to our fuel supply. As fuel represents in excess of 40% of our costs, our ability to access competitively priced oil and coal provides an opportunity to offer competitive prices for electricity. The reliability of our coal supply is a major consideration in our ability to ensure a reliable supply of electricity.

Nova Scotia Power has been very successful to date in achieving positive objectives in these areas. Our measures of workplace safety have improved, relative to other Canadian electrical utilities. Before we were privatized we were in the middle of the pack in terms of safety performance, but in 1998, the last year we have comparative numbers for, we were second-best in Canada.

In terms of competitive electricity, through controlling our costs we have been able to offer stable prices for a number of years—in fact, since 1996—and we've committed to price stability in 2000 and 2001. In doing so, we have substantially improved the competitive position of Nova Scotia in the Atlantic region. Where our electricity prices were once substantially higher than those of our regional competitors, we are now beginning to obtain a competitive edge. By way of comparison, while we have maintained stable prices, the crown-owned NB Power has had a succession of price increases.

• 2045

To be the customers' choice in energy and services, we also recognize that we must be a reliable supply of electricity. In the last two years we have achieved record reliability, in terms of the number and duration of outages, and communicating with our customers during outages.

As I mentioned earlier, Nova Scotia Power's largest single cost item is fuel. Of this cost, 70% is the cost of coal purchases. Nova Scotia Power has historically purchased coal from Nova Scotia suppliers. We expect to continue to purchase coal from Nova Scotia coal mines.

In recent years, the Cape Breton Development Corporation has experienced a number of production problems. We have cooperated with the corporation in working through these situations and maintaining a reliable supply of electricity to our customers. Recently, this included cooperation during the coal supply disruption resulting from the premature closure of the Phalen Mine and start-up difficulties with the Prince Mine.

We have three requirements for coal. These include a world-competitive price, reliability of supply, and quality.

On price, for Nova Scotia Power to continue to offer stable competitive electricity to our customers, we must have access to competitively priced fuels. Not only is this a sound business approach, it recognizes the crucial role electricity prices play in the province's ability to attract and retain industry.

On reliability, our customers do not accept interruptions in electricity, even when our coal supply is interrupted.

On quality, we require that our coal supply meet our quality specifications. Coal quality is important for the proper and efficient operation of our boilers and to meet increasingly stringent emissions performance requirements. Nova Scotia Power is able to cost-effectively meet present and future environmental requirements by specifying the quality of the coal we will purchase.

We encourage the House of Commons and the Senate to support and pass Bill C-11 in the current sitting. I say this because it is crucially important to maintain the confidence of parties currently interested in obtaining and operating the assets of the Cape Breton Development Corporation. Excessive delay could jeopardize this confidence and undermine the mutual interests of all parties in maintaining a coal industry in Cape Breton. Thank you very much.

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. Coolican.

Before we proceed to questions, I beg the indulgence of the committee to have unanimous consent to go 15 minutes past 9 p.m. That would give everyone close to five minutes, but I will be strict.

Some hon. members: Agreed.

The Vice-Chair (Mr. Julian Reed): Mr. Chatters.

Mr. David Chatters: Mr. Chairman, I'm becoming increasingly frustrated with the procedure here in the committee. I first spoke on this bill in November 1999. Now we're getting hours of notice for the witnesses to come. We're getting less than five minutes each to ask the witnesses questions. You mix up the witnesses to the point where it's impossible to ask a question that covers the broad base. I just think this is an unacceptable situation and I'm extremely frustrated with it. I've probably used up half my time saying that, but nonetheless....

I don't know which one to go to or where to go to, but I was most interested in Mr. Murphy's presentation because he voiced many of my concerns about the veil of secrecy that surrounds this whole divestiture of the assets of Devco. I share many of his concerns, certainly about what's going on, and the minister's advice that we, the public, and you, Cape Bretoners, will probably never know the terms and conditions of this sale. I hardly think that's a reasonably way to dispose of a public company that was built with the taxpayers' dollars and is so important to the future of Cape Bretoners.

My question, as short as it must be, is for Mr. Murphy. Your bid as a miners' development cooperative was rejected by Nesbitt Burns and the chair of the board of Devco. Was your bid in conjunction with Donkin Resources Limited, a proven and qualified management group, also rejected by Nesbitt Burns?

• 2050

Mr. Kevin Murphy: We weren't in partnership with Donkin Resources when they put their initial bid in for the assets of Devco.

Mr. David Chatters: Which was rejected as well.

Mr. Kevin Murphy: Which was rejected as well.

Sometime in January, Donkin Resources Limited had an injunction against the sale of Donkin, on the premise that the federal government broke their contract with them.

Mr. David Chatters: It's under litigation.

Mr. Kevin Murphy: Yes. Since that time, as I say, at the end of January the federal government, through their lawyers or Devco lawyers, whichever you want to call it, contacted Mr. Farrell and told him to submit a plan. They gave him a timeline to do that, and he did it. They said they'd negotiate. He hasn't heard anything since.

Mr. David Chatters: He didn't get a response one way or the other?

Mr. Kevin Murphy: None at all.

Mr. David Chatters: All right. That's good.

I want to get a quick question in to Nova Scotia Power. I would like just a quick estimation of how your requirement for coal will go in the next twenty years. What are your long-term plans for conversion to gas, and what happens to the requirement for coal? And is it the preference of the management of Nova Scotia Power that they be able to purchase the coal they need from Cape Breton mines mined by Cape Bretoners?

Mr. Murray Coolican: The twenty-year question is a very difficult one. The energy markets are fluctuating quite a bit these days, as are environmental requirements, although the environmental requirements aren't fluctuating up and down; they seem to be getting tighter and tighter and tighter.

Mr. Kevin McNamara: Just answer the question.

Mr. Murray Coolican: I really can't answer the question unless you can tell me what the environmental requirements are going to be and what the economic growth in the province of Nova Scotia is going to be.

What I can tell you is our coal plants today are more efficient than building a new natural-gas-fired plant. So our intention at the moment is that we wouldn't build a new generating station fired on natural gas until the load had grown enough to justify it, because our coal plants are competitive.

In our purchase of coal, our three requirements are a world-competitive price, a reliable supply, and the right quality. Given those, it's more economic for us to buy coal from Cape Breton, because the transportation costs are lower to get the coal to our plant.

Mr. David Chatters: Okay. Under duress, I pass it on, Mr. Chairman.

The Vice-Chair (Mr. Julian Reed): Mr. Chatters, I apologize for the tightness of this time. Your complaint is duly noted.

Mr. David Chatters: It's unacceptable.

The Vice-Chair (Mr. Julian Reed): Because there are twice as many opposition members as government members, perhaps I should move to Monsieur Fournier. Would that be satisfactory?

Mr. Brent St. Denis: That's fine.

The Chair: And then we'll go across.

[Translation]

Mr. Ghislain Fournier: I, too, am a little perplexed. I am wondering to whom I should direct my question, since you all gave very good presentations. Perhaps Mr. Edwards might answer. The other witnesses can add something if they wish.

I noted, in your presentation, a perceived problem. Tell me if I am right. The argument is essentially that section 5 of Bill C-11 gives the federal government jurisdiction over something that would normally lie with the province. According to you, if the federal government withdrew while offering an equivalent compensation, would the province be in a better position to manage? Would the provincial authorities be closer to you? Would they be as competent? Would it be better?

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I am still thinking of the withdrawal of the federal government who would agree to compensation to allow the industry to come forward with a proper solution because you are indeed experiencing a serious situation with Cape Breton's coal mining industry.

[English]

Mr. John Hugh Edwards: I would say, as I understand your question, sir, no, no, and no. The federal government should not withdraw and compensate. The provincial government could not take over that role. There is in fact a role for the federal government in dealing with not only places such as Cape Breton but other areas of the country. Certainly for the area you represent, if there's 80% unemployment there, I would suggest no matter what side of the political spectrum you're on, there is a role for a national government to play in an area with that serious a problem of unemployment.

I know in some other provinces there may be a larger role the provincial government could play, and I think there is a role for the provincial government, but without a federal presence in Cape Breton and in Nova Scotia, we're in serious trouble.

In our proposal for older worker adjustment, we're now looking at a partnership that would include three major partners. One would be the federal government, the second would be the provincial government, and the third would be the industry, including the employers and workers. We think that kind of tripartite approach, with business, workers, and government playing roles, is the way forward.

[Translation]

Mr. Ghislain Fournier: Mr. Chairman, may I add something? When I said that in my county there is 80% unemployment, I should have added that there are several mines there: Quebec Cartier Mining Company , Wabush Mines, Fer et Titane in Havre-Saint-Pierre. When I mentioned 80% unemployment, I was speaking of an isolated part of the region, where there are no roads. I mean the Basse-Côte-Nord. There is an English-speaking population whose only means of livelihood is fishing. With the federal embargo, there is indeed 80% unemployment. Jobs are seasonal and there are no jobs in the winter time. The average unemployment rate in my county is between 16% and 17%. I just wanted to add that. My earlier statement was a little bit off the cuff.

[English]

The Vice-Chair (Mr. Julian Reed): Monsieur Fournier, unfortunately your time has expired. Thank you for that.

Mr. Kevin McNamara: Could I reply to his question with regard to subsection 17(4), I think it was?

The Vice-Chair (Mr. Julian Reed): Surely; go right ahead.

Mr. Kevin McNamara: I don't know. I might have taken it the wrong way, but subsection 17(4) is taking the responsibility away from the federal government. Is that right?

[Translation]

Mr. Ghislain Fournier: I was speaking of the proposed section 5 which deals with meetings and which gives the federal government complete responsibility. A responsibility which, to my mind, more properly lies with the provinces, albeit with compensation.

[English]

Mr. Kevin McNamara: My reply there is that if the federal government had stayed with section 5, the Province of Nova Scotia wouldn't be in the position it is in today.

Thank you.

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. McNamara.

Mr. St. Denis.

Mr. Brent St. Denis: I'd be pleased to go last if Ms. Dockrill or Mr. Mancini wanted to proceed.

The Vice-Chair (Mr. Julian Reed): All right. Should I go to Mr. Mancini first?

Mr. Peter Mancini: I'll be very brief.

The Vice-Chair (Mr. Julian Reed): All right then.

Mr. Peter Mancini: My question is first of all to Mr. Coolican from Nova Scotia Power. Is Nova Scotia Power a proposed buyer of the assets?

Mr. Murray Coolican: No.

Mr. Peter Mancini: Have you had conversations with proposed buyers in the last month?

Mr. Brent St. Denis: I have a point of order, Mr. Chair. With great respect to my friend Peter across the way, our witnesses may feel compelled to answer questions that maybe they shouldn't feel compelled to answer, since they seem to broach the area of the sale—

Mr. David Chatters: On a point of order, Mr. Chair—

Mr. Brent St. Denis: Just a second. I'm on my point, thank you, David.

They seem to broach the area of the sale proceedings. But I suppose the witness could decide for himself.

Mr. David Chatters: No, Mr. Chairman, that's not correct.

The Vice-Chair (Mr. Julian Reed): I'll hear your point of order.

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Mr. Brent St. Denis: That was the point I wanted to raise, Mr. Chair.

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. St. Denis.

Mr. Chatters.

Mr. David Chatters: Mr. Chairman, that's unacceptable. I was passed the rules of procedure at this committee yesterday because of some of the questioning I presented, and it clearly states in the rules of procedure that this committee can force any witness to answer any question this committee puts to them.

Mr. Brent St. Denis: Relevant to the bill.

Mr. David Chatters: No, it said nothing about relevant to the bill. We can get out the book and look, if that's the way you want to go. But I would move that the committee ask the witness to answer that question.

Mr. Brent St. Denis: Then ask him about his personal finances while you're at it.

The Vice-Chair (Mr. Julian Reed): Order, please. Mr. Chatters, I need to inform you that at this particular time we don't have a quorum—

Mr. David Chatters: Then we had better shut down.

Mr. Peter Mancini: We better not.

Mr. Chairman, I think we should proceed in a way that I think will—

Mr. Brent St. Denis: I trust Peter to do that.

The Vice-Chair (Mr. Julian Reed): Can you?

Mr. Brent St. Denis: I think so.

The Vice-Chair (Mr. Julian Reed): All right. We'll take this as a discussion, because our witnesses came a long way to testify—

Mr. Peter Mancini: I appreciate that.

Mr. Chairman, the direction of my questioning is based on the evidence that has been presented and a statement and recommendation from the witness. The witness made a strong recommendation that this committee pass Bill C-11 as it is because, and these are his words, “it is necessary to keep the confidence of proposed buyers”. That's a fairly significant statement. My only question is how the witness has that knowledge.

The Vice-Chair (Mr. Julian Reed): Is the witness able to respond?

Mr. Murray Coolican: The witness has that knowledge because in any commercial transaction such as this, where there are, as I understand it, interested buyers, the longer you wait to consummate a deal, the more opportunities there are for other things to come up that lead the buyer to no longer be an interested buyer. It happens a fair amount in business. So the sooner a deal can be done, the better.

I'm certainly happy to answer the previous question. We are constrained by confidentiality agreements we have signed, but our position all along has been to cooperate with the Cape Breton Development Corporation and the government in the sale of the assets and to make ourselves available to qualified prospective buyers to discuss with them our potential requirements for coal.

Mr. Peter Mancini: So from that answer, the recommendation to this committee that the government should proceed fairly quickly is based on a general business philosophy—

Mr. Murray Coolican: That's correct.

Mr. Peter Mancini: —that's necessary for a business, not for this particular one.

Is that all?

The Vice-Chair (Mr. Julian Reed): We're running thin, Mr. Mancini.

Mr. Peter Mancini: I know, but a fair amount of my time was taken up—

The Vice-Chair (Mr. Julian Reed): All right.

Mr. Peter Mancini: I have two more questions. Then I think my friend has a question.

The Vice-Chair (Mr. Julian Reed): I'll be generous.

Mr. Peter Mancini: All right.

Finally, to Nova Scotia Power again, the requirements for the company are the price, the reliability of supply, and the quality. Where the coal comes from is a minor consideration. Would I be right?

Mr. Murray Coolican: Actually, where the coal comes from is not a minor consideration if the price is equal. If we can get a competitive price for coal at the quality we want in Cape Breton, that is in our interest because it lowers the cost of transportation.

Mr. Peter Mancini: Is Nova Scotia Power now buying coal from Colombia?

Mr. Murray Coolican: Nova Scotia Power is today buying coal from a number of sources, including Colombia, because there's not sufficient production from the Cape Breton mines.

The Vice-Chair (Mr. Julian Reed): Thank you very much.

Mr. Provenzano, I take it—

Mr. Carmen Provenzano: I relinquish my time to any of the opposition members.

The Vice-Chair (Mr. Julian Reed): That's fine.

Ms. Dockrill.

Mrs. Michelle Dockrill: Mr. Chair, I would like to state for the record my utter frustration over the lack of process. We're listening to witnesses talk about the social and economic devastation this bill is going to cause to Cape Breton Island, and I feel as if we're being asked to order our supper without being allowed to look at the menu. I think it's absolutely appalling, and I want to put that on the record.

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One of the things I'm hearing from a number of witnesses could be considered to be a direct contradiction of what we heard from the minister yesterday in terms of the federal government fulfilling its legal obligation in terms of economic diversification in Cape Breton Island.

Some numbers have been given in terms that $352 million, I think, has come through the agency we all know as Enterprise Cape Breton, which was commissioned with that economic diversification as it relates to Devco. In that timeframe, unfortunately, Cape Breton came to be known across Canada as having the highest rate of unemployment in the country.

My question to you, John Hugh, is this. Do you believe there has been success with regard to the economic diversification of the system that was put in place by the federal government? Also, do you think there is a need for transparency and accountability within those agencies or any agencies that might exist in the future?

Mr. Chair, I'd like to go to my second question and then allow the witnesses to answer.

My second question is for Nova Scotia Power, and I'll try to do the same thing and give you the opportunity to answer. You talked about the success regarding the public since privatization. Firstly, I'd like to know whether Nova Scotia Power had any increases in their rates since their privatization and if so how many. Secondly, kind of piggybacking on my colleague's comment, I'd like to know what percent of the coal of 1999-2000 was imported and whether some of that coal was delivered to the shores of Cape Breton by Canada Steamship Lines.

Mr. John Hugh Edwards: Michelle, on the first part of your question as I remember it, I'm going to quote very quickly, Mr. Chairman, if you wouldn't mind, from a paper written by Dr. Jim Bickerton assessing the regional economic aspects of the Devco closure, where Dr. Bickerton is saying clearly:

...past regional development measures did not achieve their goal of creating a new, more diversified economic base for Cape Breton as envisaged in section 17(1) of [the act]. The effort undertaken by the Government of Canada in pursuit of this objective was neither sustained, concerted, coordinated, nor substantive. Much more effective was the local economic impact of the much broader and larger infusion of government resources into metropolitan Halifax.

I'll leave off there and say that is another reflection of a particular government policy initiative to create a growth centre in metropolitan Halifax in the early 1970s.

Back to quoting Dr. Bickerton:

Thirdly, evidence from comparable cases elsewhere in Canada suggests that the Government of Canada, in cooperation with provincial partners, has the capacity to significantly offset the economic impact of major industry closures. The key ingredient in “making things happen” elsewhere has been the political will to use the instruments of the state,

—rather than the instruments of the market, as suggested by Mr. Coolican—

including the public service itself....

That is what Mr. McNamara was talking about when he mentioned decentralizing government functions. That's in Summerside, Moncton, and other places.

Finally, it has been argued that the economic and technological changes associated with globalization opens up opportunities and potentials for regions formerly handicapped by their distance from the centre of national economies. Regions such as Cape Breton can now hope to generate indigenous economic growth and development through their participation in an increasingly borderless global economy.

Michelle, that's part of the answer.

Mrs. Michelle Dockrill: Yes.

Mr. John Hugh Edwards: The second part of your question was, I think, should this process be a transparent one and should the people of Cape Breton participate in the kind of economic renewal we require? The answer, of course, is yes.

The Vice-Chair (Mr. Julian Reed): Thank you very much—

Mrs. Michelle Dockrill: What about my questions to Nova Scotia Power?

The Vice-Chair (Mr. Julian Reed): Yes.

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Mr. Murray Coolican: There were a couple of questions asked. One was about price increases since privatization. There was a price increase in 1992-93 and one in 1995-96.

Mrs. Michelle Dockrill: A rate increase?

Mr. Murray Coolican: Price increase.

I have a chart here that compares our prices to the Canadian CPI index. Of course, it doesn't show 2000-2001. Although our prices will remain stable, we don't yet know what the CPI will do with them. I'm sure the Governor of the Bank of Canada won't be so successful that it will be as flat as our prices.

The second question was about the coal purchased in 1999. We purchased slightly more coal from international sources in 1999 than was purchased in Cape Breton. We expect that to continue next year.

Mrs. Michelle Dockrill: My question was what percentage of your purchase was imported coal in 1999-2000.

Mr. Murray Coolican: I don't have an exact figure; I'd have to work out the percentage exactly. I'd say it's probably in the 40% range.

Mrs. Michelle Dockrill: Maybe you could get that to the committee.

The second part was whether any of that was delivered by Canada Steamship Lines.

The Vice-Chair (Mr. Julian Reed): Ms. Dockrill, with respect, what the internal management of a company is doing has no effect on the bill, unless you can explain how a question like that relates to the bill.

Mrs. Michelle Dockrill: Mr. Chair, the reason for my questioning, to agree with my colleague Mr. Chatters here, is the shroud of secrecy through which we are being asked to look at this legislation that is going to have serious social and economic devastation on this island. As I understand it, we have been commissioned to have witnesses here and ask questions of the witnesses.

The Vice-Chair (Mr. Julian Reed): Ms. Dockrill, I believe—

Mrs. Michelle Dockrill: If the witness wants to refuse to answer it, that's fine. I want that on the record.

The Vice-Chair (Mr. Julian Reed): In my view, a question like that is out of order. I'm going to rule that it's out of order.

Mrs. Michelle Dockrill: Fine.

The Vice-Chair (Mr. Julian Reed): I would at this time like to thank all of the witnesses who have taken the time and the trouble to come here, very many on short notice. They have had to disrupt their lives to get here and deal with what is a very sensitive issue for members of this committee, an issue that we are trying to grapple with as best we can. I thank you so much for your attendance and your patience.

I have a little business with the committee before we abandon ship. I have just a couple of brief announcements to make.

The next meeting will be on Tuesday, May 30 at 11 a.m. It will be clause-by-clause on the bill. The chair is asking that any amendments be submitted by Tuesday, May 23, at 3 p.m. to the clerk's office, room 632 in the Wellington Building. This is important.

Mr. David Chatters: I have a point of order, Mr. Chairman.

The Vice-Chair (Mr. Julian Reed): Yes, Mr. Chatters.

Mr. David Chatters: I want it on the record that some months back I specifically requested another witness who was very relevant to this issue of the privatization of Cape Breton. The committee failed to contact that witness or ask that witness if he would appear before the committee.

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I'm upset. I'm concerned with the whole process that's going on here. I think probably he was the first witness suggested to appear on this issue and I want it noted that the committee has refused to have that witness appear.

The Vice-Chair (Mr. Julian Reed): Mr. Chatters, I promise you I'll investigate it and do whatever I can to get a satisfactory explanation.

Yes, Mr. Mancini.

Mr. Peter Mancini: I have two points of clarification. One is that you want the amendments by next Tuesday and the next meeting of the committee is Tuesday, May 30. Mr. Chairman, there is a motion on the order paper. I assume you're going to deal with that motion in camera.

The Vice-Chair (Mr. Julian Reed): We don't have a quorum, Mr. Mancini, so we can't deal with the motion tonight.

Mr. Brent St. Denis: The mover is not here.

Mr. Peter Mancini: My understanding is that the mover—

The Vice-Chair (Mr. Julian Reed): Whether the mover is here or not, we can't deal with it without a quorum.

Mrs. Michelle Dockrill: I have a point of order, Mr. Chair. We requested confirmation from the clerk and we were told that the mover did not have to be here, that the sitting member could move the motion.

The Vice-Chair (Mr. Julian Reed): That's fine. I can accept that.

Mrs. Michelle Dockrill: Can we have this deferred then to the next meeting?

The Vice-Chair (Mr. Julian Reed): We'll defer it.

Mr. Peter Mancini: Can we defer it to the next meeting on Tuesday, May 30?

The Vice-Chair (Mr. Julian Reed): Yes.

Mr. Peter Mancini: Thank you.

Mr. Ghislain Fournier: À quelle heure?

The Vice-Chair (Mr. Julian Reed): À 11 heures.

The meeting is adjourned.