Good afternoon everyone.
Also, welcome to the new members of the committee and Parliament. I can only imagine how exciting the day was for you yesterday. We all came in at once, but you came in one at a time, so you have memories to be cherished no doubt.
Colleagues, a lot has happened in the five months since I was last here. We have seen some commodity prices rise, then fall, and then rise again. Some have momentum. Others, unfortunately, only have moments.
This uncertainty in the natural resource sector is a reminder of the times we live in, one marked by unprecedented change and ongoing challenges from new U.S. countervailing duties on our softwood lumber, to consolidation in the oil patch. All of this is taking place amid a global transition to the lower carbon economy that has become inevitable in every part of the world.
Take China, one of the largest greenhouse gas emitters in the world. It's making generational changes to how it uses energy, including a commitment to cut its greenhouse gas emissions by 18% and to cap its coal emissions by 2020. Next year, it's putting a price on carbon.
Consider Saudi Arabia, the quintessential oil-producing country. It's aiming to build enough solar capacity over the next 15 years to supply about 20% of its electricity.
Why are there all these changes? It's not only because environmental responsibility is essential to economic development, or because meaningful indigenous engagement is the constitutional obligation, or because public confidence is critical to resource development in the 21st century, although those are all very good reasons and top of mind for our government, but there is an even more fundamental reason. Ensuring Canada is a global leader in the clean economy is our surest path to sustainable growth, good middle-class jobs, and shared prosperity for generations to come.
This is the lens through which the main estimates were viewed and drafted. I have Deputy Minister Christyne Tremblay, and our chief financial officer Cheri Crosby, with me to help us navigate our way through the numbers, but I would like to start with a brief overview of how these main estimates fit within our government's priorities.
The first key point to make is that the main estimates are a snapshot in time, in this case from February, but departmental budgets are not static. They evolve, which is why we have supplementary estimates throughout each fiscal year.
Second, our main estimates often feature wide variations from year to year, reflecting everything from volatile commodity prices to new priorities and sunsetting programs—and this year's main estimates, Mr. Chair, are no different. For example, the biggest decrease is a forecast $335 million drop under the statutory Canada–Newfoundland and Labrador Atlantic Accord Implementation Act due to lower resource prices and production levels anticipated on the east coast. It's a steep drop to be sure, but the annual fluctuation has little direct bearing on Natural Resources Canada's funding. We are merely the conduit through which these payments flow to the offshore boards and the provinces.
Likewise, there's a $46.2 million decrease showing for Sustainable Development Technology Canada, but it doesn't mean we've cut its funding. It merely reflects our decision to transfer this important program for clean-tech companies to a different department. So SDTC disappears from our radar and reappears at Innovation, Science and Economic Development Canada.
I highlight these two items because when they are removed from the mix of net increases and decreases, a very different picture of NRCan emerges. Suddenly, a $250 million funding decrease from last year's main estimates gives way to an $82 million overall increase in our programming and operating budget. That means more money to help ensure that Canada's natural resources sector is globally competitive, more money to promote environmental stewardship, more money to encourage consumers to make smarter and more environmentally sound purchases, and more money to better manage our lands and resources and to provide Canadians with greater protections.
That's the snapshot before you today, a storyline built on our first budget, budget 2016, which featured a significant down payment on the clean economy.
You can see it with the first instalments to modernize the department's research facilities, advance clean-energy technologies, enhance environmental performance in the oil and gas industry, and create a national network of recharging and refuelling stations for tomorrow's clean vehicles.
Budget 2017 takes those investments and runs with them. For example, it provides an additional $200 million over four years to support clean technology research and innovation in Canada's natural resource sectors, including energy, forestry, and mining.
Budget 2017 also recognizes the vital role of forestry in addressing climate change, and invests close to $40 million to increase the use of new low-carbon wood technologies in infrastructure projects.
We're also providing another $43 million this year to help the forest sector develop innovative wood products and to expand into new markets. That's particularly timely in the wake of the new countervailing duties the United States announced last week on Canadian softwood lumber. I am sure members will have questions when they have a chance to ask them. I will just add here that our government plans to use every tool at its disposal to fight these punitive duties and to defend the interests of Canada's softwood lumber industry, its workers, and their local communities.
Budget 2017 also extends the 15% mineral exploration tax credit for an additional year to ensure that the mining sector continues to make its vital contribution to the Canadian economy. This tax credit helps junior mineral exploration companies raise capital to finance early exploration that can lead to new discoveries, future mines, and more jobs. Its extension recognizes that recent commodity market improvements are still tenuous and that financing remains challenging.
Budget 2017 also proposes a one-time payment of $30 million to support Alberta's efforts to stimulate economic activity and employment in its resource sector, and there's another $17.4 million over the next three years to support the National Energy Board's efforts to enhance pipeline safety.
All of these investments, Mr. Chairman, will drive innovation and help us fulfill our commitments in the pan-Canadian framework to reduce greenhouse gas emissions, spur innovation, adapt to climate change, and create good jobs across the country.
Budget 2017 also includes $220 million to reduce reliance on diesel fuel in rural and remote communities; $100 million for next-generation smart grid, storage, and clean electricity technology; $120 million for electric vehicles, hydrogen vehicles, and those powered by natural gas; $182 million for new building codes to retrofit existing buildings and construct new net-zero energy buildings across Canada; and $87 million for indigenous advisory and monitoring committees for the Trans Mountain expansion and Line 3 replacement pipelines.
Finally, more broadly and perhaps most importantly, budget 2017 identifies six key innovative industries in which Canada can lead globally and create good jobs for Canadians. Two of them fall within Natural Resources Canada's purview: clean technology and clean resources.
Our main estimates are an important piece in all of this. They are part of our government's plan to strengthen the heart of Canada's economy, the middle class, by making strategic investments that will produce sustainable growth, a cleaner environment, and thriving communities.
I'm hoping you will support our efforts today by approving the main estimates, and I would welcome any questions you may have.
Thank you, Mr. Chair.
There is the political task force, which is made up of ministers responsible for forestry from all of the provinces, chaired by Canada's Minister of Natural Resources, supported by a committee of deputy ministers and assistant deputy ministers who have been working for months, anticipating the countervailing duties that were announced 11 days ago.
We are looking to establish a pan-Canadian response. We all know there are regional differences in the softwood lumber sector across the country, but we also believe there is much in common. We have met face to face as recently as a few weeks ago. We'll meet again face to face within the next number of weeks, now that we have some idea of the quantum of the countervail—but not all, I should remind members. The antidumping duties will not be known to us until June. The final determination of the U.S. Department of Commerce won't be known to us until the end of the year.
Meanwhile, we are working collaboratively, which is a very important thing for us to be able to say at this juncture of the file, with our provincial counterparts, looking at long-term sustainability within the sector. That means market diversification. It means, within the industry itself, taking advantage of, for example, forest waste and converting it into clean fuel. It has to do with looking at tall building construction. I know my colleague cares about that, because I believe the technology was developed in Penticton, his home community. I hope he has a question about that, because I can be proud along with him, for cutting the ribbon on an 18-storey building at the University of British Columbia. This is the future.
Meanwhile, there will be job losses. We know that this is lumber five—and this is lumber five only since 1982. I'm not going to take up your time, but the first major lumber dispute was in 1839 when Maine and New Brunswick had a go at it. They were able to stop short of fisticuffs and they were able to settle it peacefully through negotiation, which I am sure we will be able to do. That is the only way we can, in the long term, come to terms with this repeating irritant that is a result of the United States repeatedly imposing punitive and, we believe, unfair tariffs against the Canadian industry.
Thank you very much, Mr. Chair. I appreciate it.
Minister, thank you very much for taking the time to be here.
I'm going to go off softwood lumber to a different issue. I want to talk about some of the things you had in your presentation.
You talked about more money to help Canada's natural resource sector become globally competitive. You talked about the uncertainty in the industry. You talked about creating good jobs for the middle class. I would argue that everything you are doing, and especially everything in this budget, is accomplishing exactly the opposite.
It's very timely that you're here today, as yesterday ConocoPhillips announced another 300 people being laid off, the majority of those in Calgary. ConocoPhillips joins Royal Dutch Shell, Marathon Oil, Total, and Statoil, which have all left Alberta. They have all left Canada. That's $80 billion in capital that has already left my home province. The vacancy rate in downtown Calgary is well over 30%, and if you go into the downtown and take a look, it probably is higher than that. More than 125,000 Albertans are out of work in the energy sector.
During the constituency break, I had the opportunity to meet with a group of unemployed engineers, geologists, and geophysicists. They have started a group called the Calgary and Region Unemployed Energy Professionals Association. There are more than 100 members. These are people who have been unemployed not just for months but, for some of them, for close to two years. Two years—and they have no idea where to go.
You talked about the uncertainty in the industry that is causing a lot of these issues. Well, Mr. Minister, a lot of the uncertainty in the industry has been caused by you in making political decisions when it comes to projects such as the northern gateway pipeline and by adding uncertainty to the regulatory process and the approval process. These companies' international investment doesn't leave if there is a good environment for them to be successful. When they don't see a clear pathway to approval or success, they will go where they're will get a return on their investment, where they are welcome, and where business is going to be.
I'm going to finish with a pretty easy question for you. For us in Alberta, what we want to see is whether the federal government wants an energy industry. Do you want an oil and gas industry or not? It's time to let us know. Is this something that you do support or that you don't support? We are getting very mixed messages.
You've put in a carbon tax. It was supposed to give us this elusive social licence so that we would be able to have projects such as the Trans Mountain one and the Line 3 reversal, but you're very possibly going to have an NDP provincial government winning an election in B.C., and they have been quite open about the fact they will block the Trans Mountain pipeline from being built, so I don't see the social licence. It just doesn't exist. This hasn't purchased us any leeway or support from a potential new provincial government in B.C.
What really concerned me in this budget was the elimination of the Canadian exploration expense. When Alberta and our oil and gas sector are hurting, rather than finding a policy that would give that sector some assistance or at least leave it alone, in my opinion—and certainly in the opinion of my constituents in Alberta—you took another opportunity to kick us while we're down. That may seem harsh, Mr. Minister, but that is a fact. That is how people in Alberta feel, especially those in the energy sector.
I took a look at Finance Canada's data this week just to see what the impact of eliminating that exploration expense would be. According to Finance Canada, “from 2007 to 2012, approximately $1.4 billion per year in public equity for the oil and gas, mining and clean energy sectors was raised” through the flow-through share program, including programs such as the Canadian exploration expense, which is available to all companies eligible for expenses. They say that “flow-through shares assist primarily junior exploration companies whose access to other sources of financing may be limited”. This has a huge impact in Alberta.
Tim McMillan, the president and CEO of the Canadian Association of Petroleum Producers, said, “I am disappointed and I think it sends a bad signal and further puts us at a disadvantage in terms of the capital we are trying to attract from global markets, compared to the [United States]...”. You talked about making us globally competitive. This makes us globally uncompetitive. The United States is our biggest competitor for capital.
This government is very concerned about the middle class. Well, our industry hires the middle class.
Mr. Minister, did you do any consultation with industry before you made this decision to remove the Canadian exploration expense from the budget?
Thank you, Minister, for being here today. I appreciate it.
I'm going to bring it back to the softwood lumber situation. Thanks for your call last week. Some of the first words you spoke, as you did today, were about the impacts that are going to happen. You said there will be layoffs and and job losses. In the short term you pointed out that there are existing programs that can help in some way in those matters—E.I. for the workers that lose their jobs, and EDC and BDC loans for the companies that may require some sort of support.
This is a very difficult situation, as other people have mentioned. I'm from British Columbia. The last time this happened we lost 100 mills or something like that. I forget the exact number. We lost tens of thousands of jobs. It really changed the face of a lot of communities, so I think it calls for more direct measures from the government to help the situation across the country.
We've seen Ontario and Quebec asking for loan guarantees from the federal government in the short term. Also, during the last softwood lumber dispute, the Martin government provided funds of, I think, $20 million to the forest industry to offset their legal costs stemming from the dispute, money that that helped those companies in the short term.
In terms of that and what we can do today, because a lot of these small companies are going to be making big retroactive payments very soon, are loan guarantees something that your government is contemplating providing, and will you contemplate providing help for legal fees?
Moving to the mid to long term, I will grant you your point about large wood buildings.
You talked about diversifying into Asia and Europe. I was at the COFI meetings in Vancouver last month, where there was quite the opposite feeling about China. The analysts who specialize in that market were kind of negative about the opportunities—in the mid term, at least—of moving into China because of the Russian competition, the low ruble, and things like that...but I don't want to go there. I'm just talking about this opportunity to really boost our domestic market, and the market with the United States, through the use of wood in large buildings.
You mentioned the $40 million or so that you're providing in this year's budget. Unfortunately, that money won't be spent until next year, 2018-19. I want to know why the delay, when we could be helping these companies now. I would like to know how much of that $40 million will actually be spent building buildings...to use our industry.
I have a private member's bill that I tabled just before the break, that asks the federal government to consider the use of wood in building large wood buildings to help the industry right now, as we have in British Columbia.
Those are my three questions.
Clean technology and innovation are really central to the government's program. There will be significant investments across a number of different government departments to make that happen. As a part of our mission to China in early to mid-June, we will be having serious conversations about this with the Chinese and others internationally.
Innovation is an extremely important element of how we will manage the transition from today's energy economy to tomorrow's. There would be agreement internationally that there is a trend away from fossil fuels. There will be a disagreement among the analysts about how long that's going to take, but I don't think there's much disagreement that this is the trajectory that can't be denied.
If you look at the oil sands themselves, we were in a position to develop them because of innovation. That resource sat in the ground a long time, until innovators figured out a way to get it out. Now we're seeing already that innovation is finding ways to take the resource out of the ground more sustainably, as judged by the carbon footprint it leaves behind.
In my conversations with other ministers from around the world, most recently at the G-7 in Rome, we are in an international marketplace and an international competition for innovation in clean technology. We should see this as an opportunity for Canada. We often talk about and should have in mind the competitive pressures from the United States but also that we are in a unique position to take advantage of our innovators, our entrepreneurs, and our riches within the energy sector, both traditional and renewable, to place Canada at the forefront.
People will know around the table of the great work of COSIA, the Canadian Oil Sands Alliance, which puts their own intellectual property aside and work together as an industry to share technologies and best practices for the benefit of all.
I appreciate that you isolated that as a very important part of the move towards the low-carbon energy future. Be assured that the Government of Canada understands the opportunities and is moving aggressively, in concert and cooperation with the private sector, to position Canada well, not only to look after our domestic situation but also to become an international leader.
I used to work in the Department of Energy, in the oil sands business unit, in Alberta. I represent a big, rural, northern Alberta riding, just south of the oil sands. The rural communities in my riding are absolutely fuelled by the energy development in heavy oil and oil sands, and conventional oil and natural gas in that area.
I appreciate your reading off some statistics, but I just want to take this opportunity to express to you why Albertans have a hard time believing your words. I think Calgarians were loud and clear about that in the recent by-elections. I hope we don't get into a debate over your telling me what Albertans think. They have a hard time believing what you're saying because you have no problem passionately, directly, and coherently talking about other sectors leading the world, and then you equivocate and can't answer the same directly about Canadian oil and gas. On a number of measures ranging from the regulatory system to environmental performance, it is acknowledged by experts around the world that Canadian oil and gas is the most environmentally and socially responsible oil and gas in the world.
I think it would help energy workers right across the country, who feel absolutely and utterly devastated and hopeless—Albertans but also Canadians in other energy-producing provinces and communities that benefit from energy development, in fact every community across the country—if you, as a leader, as a representative of the federal government, as a prominent and influential voice on behalf of Canada, would say that unabashedly and without equivocation.
If you want to know some other points, Alberta, of course, was the first jurisdiction in all of North America to regulate emissions. That was more than a decade ago. Alberta was the first jurisdiction, in fact, to implement a targeted $15-a-tonne carbon levy on major industrial emitters, which included oil sands developers. That was more than a decade ago.
Yet, here Albertans are today confused as to why, when we ask questions about concrete actions your government is taking in response to, for example, the drop in energy investment over the past couple of years, which represents the equivalent of the elimination of the entire auto manufacturing sector and 75% of the aerospace sector, your answer is, “Why aren't Albertans and energy workers grateful enough for these pipeline approvals? Why aren't they grateful enough for the five-and-a-half-weeks' extension of employment insurance?”
You're spending millions and billions of dollars in other sectors, in direct handouts to companies in other countries while people are utterly devastated about their livelihoods and their futures.
You've already pointed out how critical an issue this is with regard to competitiveness and trade, particularly with the U.S. You've acknowledged both the trade imbalance there and the way that we are heavily dependent on—
I can, and I appreciate the question for a variety of reasons, not the least of which is that the announcement was made in the Manitoba hydro building in my hometown, which is one of the most energy efficient buildings in the world.
The announcement was that we will host a major symposium on the future of Canada's energy mix in October. We will challenge Canadians to take a blank sheet of paper and write on that paper what they think our energy mix should look like in a generation. We will ask some of the finest minds around the world to join us in that inquiry, which has certainly not been done in recent memory. I think the time is just right for Canada to have a serious look at all of the sources of energy available to us, and maybe to find sources of energy that we've never dreamed of, through research and development and the work with scientists, innovators, and entrepreneurs.
It is a chance for the country to gather and to take a serious look at how we want our children—I guess, in my case, my grandchildren, if they would ever come—to answer questions such as, what's going to power the home? What's going to power the vehicle? What's the workplace going to look like? How are we going to produce and manufacture goods and services?
I welcome it as a fresh opportunity, with no preconceived ideas of what will come of it. We will set the stage in our department and will invite the country and, indeed, parts of the world to come to Canada and have a very good look at what the future energy mix will look like and should look like.
Thank you for that question.