:
Good afternoon, everyone.
We're here today pursuant to Standing Order 81(4) to study the main estimates for 2013-14, votes 1, 5, 10, 15, 20, 25, and 30 under Natural Resources, referred to committee on Monday, February 25, 2013.
Today, we have as witnesses to discuss these main estimates the Minister of Natural Resources, Minister Oliver, for the first hour, and for the second roughly 45 minutes, until the bells start, we will have from the Department of Natural Resources, Serge Dupont, deputy minister.
I welcome you both at the table now, but the first hour is with the minister.
I want to thank you, Minister, for making yourself available, as you always do. I look forward to your comments, if you'd like to make some comments on the main estimates, and then we'll get right to members' comments and questions.
Minister, the floor is yours.
:
Thank you very much, Mr. Chairman.
Good afternoon, everyone. I appreciate the opportunity to meet with the committee.
[Translation]
Mr. Chair, members of the committee, we all know how important Canada's natural resources have been to our economy over the past century. And you are aware of the unprecedented opportunities for growth in natural resource sectors.
[English]
Our government remains squarely focused on the economy and jobs, and we are committed to implementing Canada's economic action plan. We're keeping taxes low, eliminating red tape, reducing the regulatory burden, and promoting free trade and innovation.
Our approach to fiscal and economic management has not gone unnoticed. Canada's credit rating is a solid AAA for the fifth straight year. The World Economic Forum ranked Canadian banks the soundest in the world. Our economic performance also speaks for itself. We are the only G-7 country to have recouped all of the jobs lost during the last recession and added 950,000 net new jobs since July 2009. Real GDP is now significantly higher than pre-recession levels.
Both the Organisation for Economic Co-operation and Development and the International Monetary Fund have named Canada as being among the leaders in economic growth in the industrialized world over the next two years.
Mr. Chair, there is clear evidence that our approach is working. Canada's economic fundamentals are sound and we are keeping our fiscal house in order.
[Translation]
We recognize that in uncertain global economic times, the best contribution a government can make is to help create the right environment for jobs and economic growth. And that's why our new federal budget, Economic Action Plan 2013, builds on the foundation of Action Plan 2012, with a clear focus on jobs, growth and long-term economic prosperity.
[English]
For the Natural Resources portfolio, economic action plan 2013 will support responsible resource development and competitive, innovative natural resource sectors. New and renewed commitments include: $92 million over two years to support forestry innovation and market development; $325 million over eight years to Sustainable Development Technology Canada, to continue support for the development and demonstration of new clean technologies that create efficiencies for business and contribute to sustainable economic development; and $141 million over two years to ensure a secure supply of medical isotopes, and maintain safe and reliable operations at AECL's Chalk River labs.
Economic action plan 2013 contains measures to connect Canadians to available jobs, to help manufacturers and businesses succeed in the global economy, to develop new infrastructure, invest in world-class research and innovation, and support families and communities. Economic action plan 2013 is anchored in a commitment to eliminate the deficit and return to balanced budgets by 2015-16.
Indeed, many Canadians know that our government is strongly committed to prudent fiscal management. This commitment to fiscal responsibility is reflected in Natural Resources Canada's budget. Through our main estimates, Natural Resources Canada's 2013-14 funding will show total budgetary authorizations of $2.77 billion. Of this amount, $1.45 billion requires voted approval by Parliament.
You will note that we are increasing funding, as compared to the 2012-13 main estimates, in several priority areas, including $5.6 million to strengthen pipeline safety and awareness, as well as to allow for increasing annual inspections by 50% and doubling the number of annual audits, and $9.9 million to advance medical isotope production technologies.
[Translation]
For decades, Canada's natural resource sectors have played a vital role in our nation's history and in our economy. Natural resources account for about 15% of our gross domestic product and more than 50% of our exports. When you include the supply chain that provides goods and services to the resource sectors, natural resources account for nearly 20% of Canada's GDP—almost a fifth of our economic activity.
In 2011, the forestry, energy and mining sectors employed nearly 800,000 people. With indirect employment, that total increases to 1.6 million jobs—with even greater contributions in the future. There has never been a better time to do business in our natural resources sector and our government is ensuring that the sector is well equipped to benefit from these opportunities.
Over the next 10 years, as many as 600 major resource projects, worth more than $650 billion, are underway or planned. That means the creation of hundreds of thousands of new jobs. Few countries in the world are generating natural resource projects of this scale or at this pace—creating a truly once-in-a-generation opportunity for Canadians.
[English]
That's why our government is moving ahead with our plan for responsible resource development, a plan that will allow us to develop our resources, bring them to market, and bolster investment and job creation, all the while protecting Canada's environment.
Our wealth of energy resources, both in oil and natural gas, means our country is poised to reap the benefits of this natural legacy in new and emerging markets. The International Energy Agency now predicts that the United States will become the world's largest oil producer by 2020. It will be close to energy sufficiency by 2035. This means that Canadian oil exports to the United States will be competing for a declining portion of U.S. imported oil.
This trend underscores the fact that our government is doing the right thing today by helping to diversify Canada's energy markets in the Asia-Pacific and other emerging markets. Making the most of these opportunities is key to Canada's long-term economic prosperity.
l have spent a good deal of time travelling to other countries where there are opportunities for increased investments and trade to let the world know that Canada is open for business.
l understand that you are beginning a new study this Thursday and have decided to focus on three areas of diversification: export market diversification, product diversification, and diversification of energy supply sources. l am very interested in this study and I look forward to your final report on this important issue.
[Translation]
Mr. Chair, members of the committee, there is no question that Canada's natural resources will be the catalyst for a new era of jobs, growth and prosperity for Canadians. The potential for growth has never been greater than it is right now. And our government is determined to harness that advantage today to create the long-term prosperity of tomorrow.
[English]
Thank you again for the opportunity to appear before the committee.
I am pleased to answer any questions you may have.
:
Thank you for the question.
As I mentioned in my remarks, we have a big challenge, an overarching challenge. Right now we're selling our oil to one customer, the United States. Ninety per cent of our exports of oil go there and 100% of our gas. We are as an economy losing some $50 million a day because of the reduced price in Cushing, Oklahoma in the U.S. Midwest because of a pipeline bottleneck, and so we're talking roughly $20 billion a year, but that amount varies. That is the first problem.
The second problem is that we are confronting an issue of pipeline capacity that is starting to hit our economy. Before the end of the decade this will become very serious because if we don't move the oil out, it will be stranded. Over the intermediate and longer term, because of the immense amounts of shale gas and shale oil that the United States has discovered, they're going to be relying less and less on Canadian imports, and we absolutely must find new markets. Fortunately, those markets are there in the Asia-Pacific area, and 92% of the economic growth over the next 25 years is going to come from non-OECD countries. Energy demand is going to grow by about 36% by 2035, so the market will be there, and there is tremendous complementarity. We have a need to diversify our markets. The Asia-Pacific areas have an intense need to diversify their services and supply, and so we must build the infrastructure, the pipelines, to get the resources to tidewater.
Moving from west to east is one of the ways of doing it. These are not alternatives; they're not mutually exclusive. We have the resources to move in all directions. The advantage of that particular movement—and it can be through the TransCanada Mainline, which is looking at a conversion from gas to oil or the Enbridge Line 9, which is talking about a reversal from east-west to west-east—would be a lower cost Canadian crude coming to the refineries: the Ultramar refinery in Lévis, Quebec, the Suncor refinery in Montreal, and potentially the Irving refinery in Saint John, which is the largest refinery in Canada. They will then have—
Thank you, Minister, for being here today.
I'm looking at the main estimates. The government has increased, by millions of dollars, an advertising campaign coming through Natural Resources, but where have they slashed? Well, the government has slashed $162 million from the clean energy fund. Over $60 million has been slashed from ecoENERGY for biofuels. They've slashed millions of dollars from the ecoENERGY renewable power initiative and have slashed millions of dollars from the ecoENERGY innovation initiative. I could go on and on, Minister Oliver.
When we look at all of the slashes in funding that went to renewable energy in the context of your own remarks, Mr. Minister, where you said that the impacts of climate change are exaggerated and cited some fictional scientists saying it wasn't so urgent, it tells a story to the Canadian public. Now that you've had a few days to reflect, I wonder if you could tell us, do you still feel that the impacts that are dramatic, the 2° rise in global temperatures are exaggerated and that we don't have to worry about it, that Canadians aren't concerned about it? Or do you now understand that a 2° rise has severe repercussions internationally and do you retract your remarks?
Minister, thank you for coming today.
I was looking in the news recently and noticed that Alberta Premier Redford returned a few days ago from her fourth trip to Washington, D.C. to plead the case for the Keystone XL pipeline. As you know, President Obama and Secretary of State John Kerry will be making a decision as to whether to approve that pipeline. It's a very important pipeline for the economy of Canada, as you've said, and this decision hangs in the balance. Why else would the Premier of Alberta make four trips to Washington? Why else would Canadian officials be going to the United States so often?
What I see in the main estimates in front of me today, it seems to me, undercuts the efforts of the Premier of Alberta for the people of Alberta. I'm looking at the list of program cuts that has been mentioned by my colleague, Mr. Julian: the ecoENERGY retrofit program for homes, cut; the ecoENERGY technology initiative, cut.
I've marked these in yellow, and my page is covered with yellow.
There's the clean energy fund, the ecoENERGY for biofuels program, Sustainable Development Technology Canada's NextGen biofuel fund. We have the ecoENERGY for renewable power initiative, the program of energy research and development, and the ecoENERGY innovation Initiative.
My question to you is this. With this long list of things, isn't it embarrassing for the Premier of Alberta, when she goes to Washington, to try to deal with the fact, as you say, Minister, that Canada is losing tens of millions of dollars a day in revenue because President Obama does not have the social licence to approve Keystone XL, because we haven't done enough about climate change? We have all these cuts in the main estimates, right here, embarrassing and undercutting the efforts of the Alberta premier.
How do you respond to that?
:
Well, first of all, it's a bit of a stretch to suggest that the President of the United States doesn't have the social licence because of Canada. In fact, a strong majority of Americans are in favour of Keystone XL. The governor of every state through which it would go is in favour, a majority of the senators, and a majority of the House.
But that is not to say we do not have a responsibility, which we fully accept, to do what is appropriate in terms of addressing this very serious issue. We have talked, when we've gone down to the United States, and I was recently in Chicago and Houston and am going to be in New York and Washington next week again, about how our objectives are aligned with those of the United States in terms of reducing our greenhouse gas emissions by 17% from 2005 by 2020, and we're halfway there. We've talked about how our fuel standards for automobiles and trucks are identical to those of the U.S. and how, in some respects, we're ahead of the world. So we're doing a lot.
I can go through some of these issues. What we're doing is financing initiatives that work, that are efficient, that are effective, but also, we're looking at ways to be protective of the taxpayers' hard-earned dollars, and when they're less effective or when they have completed their mission, then we decide accordingly.
Our government continues to work domestically and internationally to promote a more secure supply of medical isotopes. The isotope technology acceleration program, ITAP, is investing $25 million over four years to further advance the development of cyclotron and linear accelerator technologies for the domestic production of the most widely used medical isotope, technetium-99m, meeting a clear health public policy need. That would be the production of non-highly enriched uranium, so it also has the advantage of meeting our non-proliferation obligations.
We're investing in three projects that are being led by innovative Canadian organizations which have made great strides in transforming the way medical isotopes are produced in Canada and that met the best, rigorous criteria set under a fair, competitive process.
The projects that include this process and that were signed under ITAP are at the University of Alberta, with $7 million for their cyclotron; at TRIUMF, in British Columbia, with $7 million for their cyclotron; and at the Prairie Isotope Production Enterprise, which has about $7.5 million for a linear accelerator in Manitoba. These investments reinforce Canada's leadership in medical isotopes. They support high-quality jobs at home, and they grow business opportunities for domestic and international markets.
Thank you, Minister, for being here today.
Minister, as an extension of some of the pipeline questions that my colleague Mr. Allen was asking, as an Alberta MP I do have some concerns, obviously, with some of the discussion that has gone on, with some of the misinformation campaigns that have been used to try to stop the Northern Gateway pipeline. At the end of the pipeline, though, Minister, if we're going to diversify the energy sector for the Canadian economy and for the Alberta economy, which is good for the entire nation, we need to be able to get the international market price. We're not going to do that without tankers, because the pipeline can only get us to the edge of the sea.
About a month ago, Minister, you made an announcement on the government's initiatives insofar as tanker safety is concerned. I'm wondering if you could let us know what's involved, and at a detailed level if possible, with regard to the government's intentions on that and what the relevance might be as far as spending plans and priorities go.
:
Thank you, Mr. Chairman.
The House leader of the NDP has been acting as a champion of decorum in the House. I hope he's watching his TV monitor today. Maybe someday he'll drop in and see how some of his members display their decorum in the committees.
Mr. Minister, I promise you that I'll be respectful in my questions, as we all should.
I want to thank you for coming to what is widely known as the forest capital of the world, Prince George, in the interior of B.C. I know that when you were there, you talked to the best of the best of lumber sawmill operators, and you got a pretty darned good idea that we put to use leading-edge technology for processing our wood fibre in central B.C. That's because of the government's support of technology in forest products, in expanding the use of wood fibre and in providing the funding for the research and the innovation required to get that technology to market.
Speaking of markets, I do know that you're aware of the dramatic increase we've made in our offshore shipments to markets other than the continental U.S., in an attempt to make sure we don't get all our eggs in one basket ever again. You've seen the increases in China and the potential in India and other countries that will be big consumers of our wood.
Mr. Minister, the budget committed $92 million over two years to support this forest technology and innovation and also market development. I wonder if you could just give us a little indication of your understanding of the importance of these two crucial components to the health and expansion of the forest industry, and the economic benefits to it and ultimately to jobs and the economy of Canada.
:
Thank you for your question.
Canada's forest sector is a very important driver in rural areas, and our government remains committed to supporting forest-based communities as they adapt to transforming the forest sector. We're going to continue to make significant investments in support of the forest industry and sustainable resource management. We're seeing the results of these investments right across Canada, as you mentioned.
I was in Prince George where I attended the annual Council of Forest Industries convention. While I was there, I announced investments in two important programs that will assist the transformation of the forest industry through innovation and market expansion. Let me very briefly explain those two programs and why they're so important.
Investment in forest industry transformation supports Canada's forest sector in becoming more economically competitive and environmentally sustainable, and doing that through targeted investments and innovative technologies. Included in the announcement was funding for five unique projects across western Canada, each representing a Canadian first, or in some cases a world-first application of new technology. These new, really exciting projects will showcase Canada's leadership in pioneering new products and new expertise for the benefit of our country's forestry sector and for the communities that depend on it.
The expanding market opportunities program was designed to help create the thriving sector by growing international markets, promoting Canadian forest products as an environmentally responsible choice, expanding wood use in North American non-residential and mid-rise construction, and demonstrating that Canada is a world leader in sustainable forest management and a preferred source of sustainable forest products. So the funding will make Canadian forest products even more attractive and viable in the global marketplace.
We recognize the challenges facing the forestry sector. We've taken action through the economic action plan, and we've taken unprecedented investments to renew the forestry sector, so the $92 million over two years is part of that. I'm proud our government continues to support the jobs of hard-working Canadians in rural Canada.
:
We will reconvene our meeting with witnesses from the Department of Natural Resources. We have deputy minister Serge Dupont who will be here for this second three-quarters of an hour until the bells start ringing.
We have Kami Ramcharan, assistant deputy minister and chief financial officer, corporate management and services sector. Thank you for being here.
We have Anil Arora, assistant deputy minister, science and policy integration. Thank you very much for being here, sir.
I understand you don't have any opening comments you'd like to make, so we'll go directly to comments and questions from members, starting with a seven-minute round.
Mr. Anderson, go ahead, please, for up to seven minutes.
It is indeed an important and to some extent historic kind of opportunity to further the relationship with the aboriginal communities around resource development. At Natural Resources Canada we interact and try to make contributions to that relationship in different ways, in particular through the major project management office, which brings together all of the major regulatory departments in Ottawa.
We try to coordinate our action there, in particular as regards the proper consultation process that has to take place where resource development occurs, obviously ensuring that the crown fulfills its constitutional duty to consult, ensuring as well that there is guidance to industry in engaging with aboriginal communities in moving forward projects, working with provinces as well to better align our processes.
More recently, and perhaps in a more focused kind of manner, you are aware that the government appointed a special representative in Mr. Doug Eyford in western Canada to engage with aboriginal communities on the question of west coast energy infrastructure. It is an effort that has to take place across Canada, whether for the Ring of Fire or for western energy infrastructure. That development must take place in consultation with aboriginal Canadians, and those opportunities must be seized to improve their economic and social conditions.
:
I would be glad to, Mr. Chair.
In some cases you have the titles and then you have the specific measures, so let me just try to tell you a bit about the specific measures there underneath it.
From the $84 million, $54.8 million of that is the Port Hope area initiative. That is not related to what we typically call the responsible resource development initiative, which is about new projects. This is actually about undertaking the cleanup in Port Hope, which has been promised now for a number of years, and which has been going through a regulatory process. We're now actually starting the work of building the waste management facilities and undertaking the real implementation of that multi-year effort.
Similarly, $34.5 million represents the higher amount this year that will be expended under the nuclear legacy liability program that we just discussed in regard to some of the nuclear obligations of Canada. So under that specific heading, Mr. Chair, the majority of it really has to do with this charging obligation relating to environmental remediation.
I'd like to focus my questions on AECL. Its emphasis has changed somewhat over the years in terms of how the federal government relates to it. I hope I'm not covering any territory that anyone else has covered.
Looking through these basic numbers, we have 2011-12, the $537 million, main estimates of $103 million, and estimates to date of $345 million. Then, for 2013-14, we have the exact same $102 million in the main estimates going forward.
Could you break this down in a fair bit of detail, or in as much detail as three minutes will allow? I think to a lot of people it seems strange: you have estimates of $101 million, and then you have expenditures of $500 million or $300 million. Could you just break that down in terms of why there are the discrepancies, why going forward we're estimating again $102 million in 2013-14?
I would like you to break down all the constituent elements one more time for us, if possible.
:
I appreciate the question, Mr. Chair.
The $102 million is basically the base funding that has been there for a number of years for Chalk River Laboratories. It kind of funds the infrastructure. I mean, it's basically Canada's biggest lab, with roughly 3,000 people working there.
Basically there are three functions. I have the exact breakdown of the costs, but.... There is waste management in the sense that they do have to manage what is there historically, from post-war. There is, at this time, still production of medical isotopes. There is research being conducted on a National Research Universal reactor. There are services provided to CANDU owners and to the CANDU supply chain, basically science and technology services. That's kind of the gamut of services now.
The $102 million at this time, which is the money reflected in the main estimates, does not fulfill fully those obligations. That is why in successive budgets over the past number of years there have been announcements of additional support for Atomic Energy of Canada Ltd.
Now, some years back, that additional support covered not only laboratories but also the commercial part, which was trying to sell the reactors, basically unsuccessfully. That part is no longer receiving additional moneys in the budget. It is receiving in these main estimates, through what is statutory funding, $109 million. It is not going to SNC-Lavalin...or part of it is, indirectly, but essentially it is discharging our final responsibilities vis-à-vis the commercial part, which includes different commitments that we still need, including warranties for the work at reactors and so forth. That amount, which is $109 million now, is basically going down to zero, because we are phasing out totally our support for the commercial reactor side of it.
The $102 million has been supplemented this year by $141 million over two years in the budget. It will be reflected in the supplementary estimates for you. That is intended basically to allow Chalk River Laboratories to do the functions I stated earlier and to meet the regulatory requirements of the CNSC in so doing, ensuring that it's done safely and with proper protection for the environment.
So it's been a bit...over the last number of years, with part of it in the main estimates, part of it coming in supplementary estimates, because of the budget process. We don't have, fortunately, at this time—I guess we still kind of cross our fingers—bad surprises mid-year, like repairing the NRU, that require even further supplementary estimates to come before this committee.
Thank you, witnesses, for being here.
The last time you were here we talked a little bit about the Ring of Fire, and you mentioned it again today. Since that time a minister for the Ring of Fire has been appointed. We also understand there's a 15-department secretariat to coordinate the Ring of Fire. Can you supply us, please, with a list of those 15 departments that are involved in the Ring of Fire?
Also, since you appeared here last, the government took three expert witnesses to court to try to prevent them from testifying. Of course, the court ruled in favour of the witnesses. So mining companies still aren't getting good leadership for the Ring of Fire.
We really want to support this project. We want it to go forward, because it's going to create a lot of jobs. When we heard testimony in the committee when we studied the Ring of Fire, the first nations that came to testify were quite explicit that they really support the Ring of Fire and they want to work with the government and the companies. The companies said, “Tell us what the rules are and we will follow the rules”, but we're not getting this kind of leadership.
Would you agree that we need a better approach to the Ring of Fire?