Thank you, Mr. Chair. Good afternoon. I have very brief remarks to go through. A deck has been provided to you in both official languages. That will guide the remarks that I'll share with the committee today.
Before we do that, please allow me to introduce those sitting with me here. On my left is Jeffery Hutchinson, recently appointed deputy commissioner of strategy and shipbuilding for the Canadian Coast Guard. Immediately to my right is Kevin Stringer, our senior assistant deputy minister for ecosystems and fisheries management. On my far right is Trevor Swerdfager, assistant deputy minister of ecosystems and oceans science. Tom Rosser is our senior assistant deputy minister of strategic policy. He is currently hung up in Boston at the International Boston Seafood Show, which is a fairly major event for the department.
The appropriations process is not news to this committee. I just wanted to quickly reference that we're in the third supply period of the cycle. For us, as I'll explain in very brief remarks, it's a fairly important supply, because of the way this particular year has unfolded.
I'll just pass over the supply timeline but you'll note the growing appropriations for the department. We'll come back to those numbers again.
As we know, there are three supply periods for this year. It is unusual for us, but the department went in supplementary estimates (A) because that was the opportunity to bring in the infrastructure funding. We brought in $203 million in that first supply period, which is a large amount of funding. Almost all of it was for the infrastructure initiative to get us out of the gates and going for the fiscal year.
We were not in the second supply period, supplementary estimates (B). That was primarily reserved for items coming immediately out of the 42nd general election and the hot issues that evolved from that.
Therefore, this year, in a bit of an unusual way, we have fairly substantial supplementary estimates (C) as a result of having held on for the bulk of the year.
The table that appears in the official publication of the supplementary estimates (C) can be found on page 2-32 in English or on page 2-72 in French. What is shows you is that there are 25 items that we're seeking your support for through the voted process. Overall the supplementary estimates (C) total about $184.5 million of which $182.7 is subject to vote. The difference is the $1.7 shown on the table in the total column, our statutory items that are brought in through other enabling legislation. Primarily, our employee benefits increases for the year.
The bottom of the page frames for you what the key increases are related to. I'm going to get into those in just a second.
Supplementary estimates (C), authorities to date, is interesting from my perspective because when you look at the horizon of each of the years previous to this year, you'll notice a fairly level total authorities story for the department. This year, in 2015-16, you see a fairly significant jump. That's because of the two big drivers and we're going to see those in this estimates process today.
This is our capital investment. We're one of the departments in the public service that has a tremendous range of capital assets and a need for capital investment to build our marine fleet and, as I mentioned in our opening remarks, this year we brought in about $190 million just for the infrastructure program alone.
Let's move then to some of those details in your official documents under the explanation of requirements section, page 2-32 or 2-72. These are the big items and there are just a few other things that I'll touch on. Let me just explain quickly what they are and help align us with what our estimates are requesting of this committee in terms of support.
The first item is this year's installment of some $116 million for the ongoing construction of the offshore fisheries science vessels.
We are building a package of three of them through Vancouver Shipyards. We're well into construction mode now. This year we're bringing a substantial investment into those construction costs. Over the next two fiscal years in particular, but ongoing for maybe three years in total, we're going to see some big numbers for this program. Next year, it's going to bump up into the quarter-billion-dollar range to support this build.
Moving down a notch, we have $23.3 million for incremental operating costs. This was a year in which Fisheries and Oceans, after we had begun the year, ran into a few unexpected, unplanned requirements: things such as litigation and settlements for cases that have been ongoing for a while; things such as unexpected events, which in many cases occurred on the world stage, such as the MV Marathasa incident in the harbour at Vancouver—things that were adding up for us that we couldn't find a way to sustainably manage when we were early in the fiscal year. We sought and received approval for an incremental investment to help us with those operating surprises, if I could lightly put it that way.
Another item—and this committee has seen this a number of times—is incremental fuel for the Canadian Coast Guard. The way our operating model works is that we're funded for fuel to a certain threshold, and inevitably every year we need more than that threshold for the Coast Guard to sail all of our operations and run our icebreaking program annually. We seek, and pretty traditionally receive, a $16-million top-up. The way that particular piece of funding works is that it's only accessible should we require it. If in a particular year we actually don't need a full $16 million, the rest returns to the fiscal framework.
I won't go through every single item on this page. Moving to the next one, $6 million is the renewal of a program that had sunset, for major projects management office funding. We're bringing back in now the first year of five years. This is an example of an item that, when we appear before you on the main estimates for 2016-17, I'll be seeking to bring in for the coming four more years through the main estimates cycle.
Skipping one, I'll go to the Pacific Salmon Foundation. We flow entirely the $2 million named here through to the Pacific Salmon Foundation for a science research project that they're undertaking.
Last, just ending out the page, there are two more programs that were renewed. They have five-year funding profiles, so again we're bringing in this year's increment in supplementary estimates (C) and will bring in the remainder through the main estimates.
Slide 10 shows a number of other things that we're doing inside the house or between departments. Internally we are transferring funding between votes. What that basically allows us to do is move money that has been received in our operating vote for programs for which we wish to and would normally run a grant or a contribution with an external body. These internal transfers allow us to put the money from our operating into our grants and contributions vote. They're net-neutral; it's not a new ask.
Then the bottom item listed on that page is the transfers that are listed. There are eight of them, for which we transfer money to or receive money from a department through arrangements that have been made before the year begins. These are usually arrangements whereby we're doing collaborative projects together or we are hosting a department in one of our facilities or are paying another department to do work on our behalf. Those are all listed in the supplementary estimates (C) documents on the pages following page 2-32, or in French page 2-72, as I mentioned before.
The final slide is slide 11. This is new for us. Anybody who followed the parliamentary budget office announcement or supplementary estimates (C) profile that he put out a week ago would realize that this is a new publication. It's not accessible through the supplementary estimates publications, but it is on the TBS and PBO websites. The PBO considers this to be an element of increased transparency. What it asks of the departments now is to declare those items which it feels it will be lapsing forward to next year and say what the reason might be. This table is a replication of the table that will represent our department.
This whole table totals $28.7 million, and the vast majority is the single item on vote 5, capital expenditures. For us, as I itemize under vote 5, this is money we're pushing ahead to match our repair and maintenance needs for our vessel life extension program.
The usual issue for these things is shipyard capability and when we can get the vessels in for the major work that is required. We're moving the money ahead to match when the ships could be brought in.
That, in a nutshell, is what the supplementary estimates (C) publication represents for Fisheries and Oceans and the Canadian Coast Guard.
I guess I'd say a couple of things in response to that.
First, I would echo Kevin Stringer's comment to the effect that, just to be clear, there's nothing in the supplementary (C)s that addresses those issues materially, if there's any question about how that links.
With respect to the paper, we're aware of it. We have people who are looking at its conclusions. The debate around many of the topics that it touches on is a very robust one, as you know.
Insofar as lab capacity is concerned, on some of the issues that are touched upon, not only in the paper but in the regulatory domain that gets into that same field, lab capacity in that particular area for the most part is not a problem for us. We have lab capacity shortages in certain areas as compared to the demand upon them, because demand has continued to increase, but in this area our ability to meet the laboratory testing requirements and activities we think is actually quite sufficient.
Should the demand change, then we might have to think about different approaches to it, but for the most part, our lab facilities across the country—we have four that we use mostly for this sort of work—are extremely busy. They're working at full capacity, but their ability to touch on these sorts of things is quite high.
We also work in collaboration with people in the university community and in other agencies when we get into some of the other issues that are about more food safety and other things, so they're not only in DFO labs. We do have access to that set of expertise as well.
The original budget for these vessels was set in a rather different time and place. For one, NSPS wasn't contemplated at the time, so the question of what a fisheries science vessel would cost was kind of using commercial comparators. I don't think they were the right comparators.
Second, those initial budgets didn't take several key things into account. They didn't account for inflation. If you have a delay in building the ship, a gap develops between the budget you set and the actual price for the ship, because inflation kicks in, and marine sector inflation tends to run hotter than general inflation.
Third, we know that some specific costs that are required for a shipbuilding project weren't included in those old numbers. Without getting too technical, warranties, for example, were not costed in. Engineering wasn't costed in. Insurance during the build process wasn't costed in. No matter where you build your ship or when you build your ship, you'll have some other costs within your project management that were never reflected in those budgets.
Our costing internally is significantly more robust than it was in 2005 or 2006. In fact we don't use the words “cost overrun”. That may sound a little defensive, but we actually think of it in terms of properly setting the budgets at this time. We're trying to take a comprehensive view of what the project costs to run. We're taking a comprehensive view of the impact of commodity prices, inflation, currency fluctuations. We're definitely working towards costing on those vessels that's in a completely different league in terms of its reliability from the original numbers.
There are a number of areas where our research is targeting that broad geographic area that some people call the Salish Sea. You can use whatever geographic boundary you like.
Essentially, I would describe it as a focal point of our science program that tends to fall in three main streams.
One is around fish, fish stocks, and fish health itself. As I said earlier, we are trying to understand what is happening to these animals. What is happening when they are in their natal streams? Where do they go? All those sorts of things. What is affecting their health? This is the fish stock work. There is a fair bit of work being done, not only but primarily, on salmon, all elements of the salmon stocks. We do a fair bit of pelagic work there. In that whole geographic area, we are also looking a fair bit at shellfish, for a variety of reasons. I could talk about some of the content of that.
The second area of inquiry is more about the environment in which the fish are swimming, living. One of my colleagues earlier mentioned the oceanographic program. A big part of what we are trying to do is to understand or improve our understanding of the physical conditions in which these animals are living. Is temperature changing? Is pH changing? Is salinity changing? If so, so what? How do all these interact?
The third chunk of our work, which focuses a bit more on the Broughton but also throughout the west coast, is to try to take all of that, put it together, and model what we think will happen if certain disturbances or changes occur. There is a fairly substantive modelling element.
The first point I would make is the one that you just made: we're not alone on this. Parks Canada is a major partner on this. In fact, of the 1% that is protected now, Parks is about half and we're about half. Then there a lot of smaller players. There's also Environment Canada, with migratory bird sanctuaries and those types of things, including other wildlife areas that are in the oceans.
There will probably be maybe three broad strategies—west coast, east coast, north—and they will be unique. We'll have to look at the types of things we'll do. The first is making sure we have the right strategy, and the second is getting the right players around the table. The minister has met with environmental groups, indigenous groups, the fishing industry, and other industry in all of those areas, and talked about engagement. It's about setting the table appropriately.
A huge amount of work has already been done by science to identify ecologically and biologically significant areas. Some of the key stakeholders and environmental groups have done a lot of work as well, as have indigenous groups, provinces, and other partners. It's a question of very quickly pulling together all of that material, identifying the areas we would want to protect, and the measures we would want to apply in those different areas. It's not easy.
So there's all of that to do. It really is about getting the partnerships right. We've established a federal-provincial task group on this. We've pulled together environmental groups in a couple of forums. We've talked to indigenous groups, we've talked to the fishing industry, and it's a question of now getting those things together, pulling together the information we have.
There's one other thing: when exactly is “2017”? Is it January 1, 2017? Is it December 31, 2017? Is it June 8, World Oceans Day, 2017? At this point it makes a big difference.
There are lots of things to consider.
Now, gentlemen, thank you so very much for joining us today—Mr. Swerdfager, Mr. Stringer, Mr. Muldoon, Mr. Hutchinson.
Since we are now in the position of completed discussions on estimates, we have some voting to do, which of course is necessary.
Pursuant to Standing Order 81(5), the supplementary estimates (C) for 2015-16, votes 1c, 5c, and 10c under Fisheries and Oceans were referred to the committee on Friday, February 19, 2016, as you all recall.
|| Vote 1c—Operating expenditures..........$51,423,443
|| Vote 5c—Capital expenditures..........$126,856,438
|| Vote 10c—Grants and contributions..........$2,690,000
(Votes 1c, 5c, and 10c agreed to on division)
The Chair: Shall I report these supplementary estimates (C) 2015-16 to the House of Commons?
Some hon. members: Agreed.
We only have 30 minutes left. Rather than take a break, let's proceed into committee business.
Since we're all here, what I'm going to do for the sake of scheduling is go over the schedule once more. To get into May and June, as I said earlier, let's just recap what we're planning to do in March and April. We do have a full schedule for March and April. Following that, we can discuss what to do in May and June. Keep in mind, we have one study to do that we've passed and haven't discussed yet. That would be the northen cod study that Mr. McDonald brought forward.
Mr. Donnelly, go ahead.
Back to the schedule.
Let's go to March and let's finish this off. Today, we have committee business on supplementary estimates (C). On March 10 we have our first witnesses for the study on Comox.That's up to eight we have so far. We'll have five witnesses in total at that point.
March 22, the House is open, but the budget will be taking place in the House of Commons, so we've decided that we will not have a meeting for the sake of the budget.
Something has come up, or not. On March 24 we provisionally put in that we wanted the minister to come in to discuss the mandate letter. We've been informed that the minister is not available on that particular day. He is available on two dates that I'll talk about in just a moment, but first, let us deal with the 24th. It is the Thursday before Good Friday. In the past, sometimes we've used a Friday schedule on a Thursday, but my understanding is, after discussions with House officers, that this is not going to be the case. We're going to stick with the Thursday schedule, but it is the day before Good Friday. Do we want to have a meeting at that point, given that it is the Thursday before Good Friday?
Any discussion? Would you like to think about it and I can move on to the next day?
We'll leave that there. We're solid on April 19. I have good consensus on that.
On April 21, we're going to analyze the Comox report prepared by our trusty analyst here. We'll discuss the report as presented to us, make any changes, look at any suggestions you have, and possibly finalize it at that time.
If there are changes to be made to that report when our analyst presents it on the 21st, we'll have to have a subsequent meeting to deal with those changes, pass the report, and bring it back. That being said, we're okay with April 21 for the Comox report. Done.
Let's all turn to May. It's an open sheet here. What was one priority is now two and possibly three.
Number one, we had the cod study as proposed by Mr. McDonald. I think there was some interest in travelling with this particular study. There's also now the mandate letter to be discussed at one of the meetings. Again, I can't set a date for that, because we don't know what date the minister is available.
Can we have some discussion about May and June? I would like to have a discussion, if it's okay with everyone, about the cod study and what we would like to do with this. Do we want to travel to areas affected by the northern cod? Do we want to stay here and do it, and have witnesses here? I'm open to discussion on that one.