Natural Resources Committee on Feb. 10th, 2009

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone. Welcome to our first business meeting of the committee on natural resources.

Pursuant to Standing Order 81(5), we are considering supplementary estimates (B) 2008-09. Votes lb, 5b, 15b, and 25b under Natural Resources, referred to the committee on Thursday, January 29, 2009, are the business of today.

We have appearing today the Honourable Lisa Raitt, Minister of Natural Resources, in her first appearance before our committee.

Welcome, Minister. I'd like to say that the committee appreciates your attending on such short notice so early in this session. Go ahead with your presentation, and then we will welcome questions. Welcome.

[Lisa Raitt, Conservative, Minister of Natural Resources]

Thank you, Chair. I appreciate that.

Thank you, everyone, for having me here today. As you know, this is my first appearance before the committee as Minister of Natural Resources. I'm very pleased to have the opportunity to meet with the committee so early in this new session of Parliament. I look forward to working with the committee and to having the benefit of your advice and counsel in the months ahead, as we work together to see Canada through these difficult times.

Let me begin with a brief description of our government's approach to assuring the contribution of the natural resources sector to our long-term prosperity and of how budget 2009 supports that vision while helping the sector address serious short-term challenges.

I'm sure I don't have to remind this committee of the importance of a healthy natural resources sector to Canada's economic well-being. This country is a natural resources giant, but in an increasingly competitive global marketplace, to maintain that stature we need to move strategically. Our government's focus is to build on our strengths, our deep and diverse resource endowment, the systems that support its development, and the people and the ideas that together are responsible for Canada's resource advantage.

For example, we are expanding our knowledge of our resource base with investments such as a $100 million geosciences program to search for new resource opportunities, especially in our north. Every dollar invested in geoscience leads to $5 in exploration spending by the private sector and $125 in resource discoveries. We've created FPInnovations, the biggest public-private forest research consortium in the world, and have made Canada a leader in key technologies. We continue to develop and refine the systems that support our resource sector, from the roads and the ports and other infrastructure we need to a tax and regulatory regime that is as competitive and effective as any in the developed world. Budget 2009 continues a strategic approach, while also supporting the sector's own efforts to address the immediate challenge.

Over the past two months I, alongside other members of our government, have travelled from coast to coast to coast to consult with Canadians on what they wanted to see in the budget. This was the most comprehensive and inclusive pre-budget consultation in Canadian history, with direct input from every province and territory, hundreds of organizations, and thousands of Canadians. It of course included stakeholders throughout our resource industries and in resource communities across the country.

We were able to shape a broad consensus on what actions needed to be taken to protect our economy, and the overarching message was very clear: our economy requires immediate stimulus, but we must not put Canada's long-term financial health at risk. Budget 2009 shows that we heard that message loud and clear. This budget will generate substantial economic activity now, protect Canadians hardest hit by the recession, and at the same time contribute to, rather than jeopardize, long-term prosperity.

[Geoff Regan, Liberal, Halifax West, NS]

I have a point of order, Mr. Chair. I'm sorry to interrupt.

[The Chair, Conservative, Leon Benoit]

Mr. Regan has a point of order.

[Geoff Regan, Liberal, Halifax West, NS]

Can I just get a clarification? We're dealing with the supplementary estimates (B). The minister is talking about the budget. Does that mean you're going to allow questions relating to the budget? If she's going to talk about it, I hope you'll be allowing us to talk to.... Otherwise, we should stick to the topic of the supplementary estimates (B).

[The Chair, Conservative, Leon Benoit]

Of course, the supplementary estimates apply in a very broad way to what the minister is saying. As you would know, Mr. Regan, when a minister is before committee, it's best to stick to the business on the agenda, but it has been tradition that other questions are allowed.

[Geoff Regan, Liberal, Halifax West, NS]

Good, thank you.

[The Chair, Conservative, Leon Benoit]

Would you please continue, Minister?

[Lisa Raitt, Conservative, Halton, ON]

No problem.

As Minister of Natural Resources, I'm acutely aware of the special difficulties being experienced by our forest sector and the communities that depend on it. Budget 2009 will further complement the sector's own efforts to work through this period of transformation: an additional $170 million over two years to support market diversification and innovation to create new products in the sector. New incentives for home purchase and renovation, and funding for improvements to social housing will stimulate additional activity in this sector. The flexible $1 billion community adjustment fund will provide essential and immediate support to communities most affected by the global downturn, including resource-dependent communities all across the country.

Other measures, including extending the accelerated capital cost allowance and eliminating the tariff on imported machinery, will further stimulate activity in the sector. We are extending the special mineral exploration tax credit, and the $200 billion extraordinary financing framework will enlarge ongoing access to capital in the economy, including in the resource sector.

In the energy sector, the focus is green. Since 2007 we've committed some $3.6 billion to develop our clean energy potential, increasing our capacity to generate clean renewable electricity and cleaner fuels.

We also need to be cleaner producers and consumers of conventional energy. Building on previous investments, budget 2009 will establish the $1 billion clean energy fund to support further development of key technologies such as carbon capture and storage, or CCS. CCS shows great promise in allowing Canada to benefit from its strategic petroleum resources while achieving significant reductions in GHG emissions, the kind of technology Canada needs and the world wants.

Of course, the cleanest energy we have is the energy we don't use. We are adding to our investments in energy efficiency with $300 million to extend the extremely popular ecoENERGY retrofit homes program. This will allow another 200,000 homeowners to better control their energy costs and reduce emissions, while generating some $2.4 billion in economic activities in communities across Canada.

I can't discuss energy without mentioning the recent incident involving a small leak of heavy water at the NRU reactor in Chalk River. Let me assure the members of the committee and all Canadians that at no time was there any significant risk to workers, the public, or the environment. As required by Canada's nuclear regulatory framework, the incident was reported to the Canadian Nuclear Safety Commission. The medical community in Canada received timely information from Health Canada regarding the availability of medical isotopes. Nonetheless, many have expressed concern that the heavy water leak should have been reported to the public as well. I'm pleased that both AECL and the CNSC have committed to revising their approach on public reporting of such events.

As for the NRU reactor itself and ensuring our supply of medical isotopes, our government continues to be proactive. Among other actions, Canada brought the key international players together at a global forum in Paris last month. I'm pleased that all participants agreed to collaborate in fostering the development of contingency plans to manage any future shortages in isotope supplies. Securing global isotope supply is, after all, a global challenge that requires a global response.

Beyond its role in isotope production, it is understood that nuclear technology will play an important role in how we meet the growing demand for energy with the need to tackle climate change. We also understand that this is a $5 billion industry that provides high-quality jobs for some 30,000 Canadians. Budget 2009 includes $351 million over the next year to support development of the advanced CANDU reactor and to maintain safety and reliability in the operations at Chalk River. This investment will support AECL's pursuit of new business in Canada and globally.

Along with the ongoing review of AECL announced last year, these and other steps will strengthen AECL, build on Canada's existing nuclear expertise in a changing global market, and further protect the interests of Canadian taxpayers.

In short, Mr. Chairman, budget 2009 will provide immediate stimulus to our resource industries, protect the jobs of tens of thousands of Canadians, and continue to reinforce the foundation for long-term success, building a resource sector that can compete with anyone, anywhere, economically and environmentally. As we've done in the past, with budget 2009 we are continuing to make the prudent, responsible investments that protect Canadians in the near term and build even greater prosperity in the future.

Thank you very much for your time, Mr. Chairman. I look forward to any questions the committee may have.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Minister, for your very informative comments and for keeping it within the time that we'd requested.

We will start the seven-minute round of questioning with Mr. Regan from the Liberal Party.

Go ahead, up to seven minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Thank you, Madam Minister, for appearing. Pardon me for interrupting on that point of order to figure out how the rules would work today. I'm pleased to have that clarification.

One of the issues you talked about was AECL, of course, in Chalk River, which has been topical of late for a lot of us. The briefing note by the committee researcher indicated that there wasn't new funding for AECL in the supplementaries; however, there was $351 million, of course, mentioned in the budget. The question is really whether AECL has enough resources to accomplish its mission.

The other question is this: where is that money meant to be spent? Is it true that the $351 million includes $135 million for the advanced CANDU reactor, or the ACR-1000, $72 million to decommission the two MAPLE reactors at Chalk River, and $144 million to maintain safe and reliable operations at Chalk River Laboratories?

[Lisa Raitt, Conservative, Halton, ON]

Thank you for your question.

As we've indicated already, our government is continuing to support the development of cleaner energy solutions. Our target is to achieve 90% of electricity from emission-free sources by 2020. Nuclear energy, of course, is a part of this clean energy mix.

We also recognize the importance of the nuclear industry in Canada's economy. As I mentioned in my opening remarks, specifically in the area that I'm from, southwestern Ontario, there's a number of very important manufacturing industries that have sprung up around AECL. In terms of innovation, expertise, technology, engineering, and science, the nuclear industry is an incredibly important part of the fabric of our economy.

On the points in your question, budget 2009 provides $351 million, on a cash basis, to AECL for 2009-10 for its operations. As you indicated, that includes the development of the ACR and maintaining safe and reliable operations at Chalk River and with respect to the isotope facilities. The allocations are all subject to Treasury Board approval.

In terms of your breakdown, I think it's more accurate to indicate that the total amount for the isotopes would break down even further. Part of it is for the MAPLE project and the other part of it is to explore the extension of the licence of the NRU to bring it past 2011 for the continued production of the medical isotopes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

I'm a little confused. When I talk about the $72 million to decommission the two MAPLE reactors and the $144 million for Chalk River, you sort of say the money for the isotopes, which doesn't seem to be the same thing. Would you clarify which of these numbers is wrong and where the money is instead?

As well, I realize it has to be approved by Treasury Board, but clearly you have a pretty good idea of what you want to do, I would hope.

[Lisa Raitt, Conservative, Halton, ON]

Yes.

No, nothing is wrong in the way you indicated. I'll just be very clear. When you indicated $72 million for the total isotope package, I was just giving you further refined information. That $72 million breaks down further. Part of it is for the MAPLEs, which is $25 million for the decommissioning, and the other part is $47 million, which has to go to pursuing the NRU licence extension past 2011.

In terms of the $144 million, that is for Chalk River, as you indicated, and $135 million for the advanced CANDU reactor. I hope that helps clarify this.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

How much of the $144 million for Chalk River is earmarked for fixing the ongoing leak of water into the containment area? How much is to determine the cause of the heavy water leak, which led to the release of tritium into the atmosphere? Can you tell us and tell the public exactly how much tritium was released?

[Lisa Raitt, Conservative, Halton, ON]

With respect to Chalk River, AECL has indicated the amount they'll be utilizing and spending in their budget, the amount that they ask from us in order to help them with the ongoing rehabilitation and operations at Chalk River. To get to the specifics of how much they plan on spending in each budget line item, AECL would be the more appropriate entity to speak with on that one.

On the second part of your question, I'm going to defer to Serge Dupont, the associate deputy minister.

[Serge Dupont, Associate Deputy Minister, Department of Natural Resources]

Sir, I cannot give exact numbers with regard to the tritium that would have been released, but what we can say is, as per AECL and the CNSC, that all such releases would be controlled, monitored, and reported fully within regulatory standards.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

In the department's estimates last year, one of the things it said under the Canadian Nuclear Safety Commission was that “Canadians will only accept the use of nuclear installations and processes in Canada if they are confident that there are no undue risks to them and to their environment”.

Wouldn't you think that in view of that sentiment expressed by the department itself less than 12 months ago, you would want to have quick and full disclosure of these types of events, like the one that happened on December 5 and whatever has happened since then, rather than waiting so long afterwards? And secondly, when did you ask for the report in relation to the events of December 5, which you tabled last Thursday in the House?

[Lisa Raitt, Conservative, Halton, ON]

I'm just going to make sure I'm referring to the exact timing and the dates you asked for, Mr. Regan.

With respect to the water leak itself, as I indicated in the House, I was made aware of the fact that there was a leak and that as a result the reactor would not be restarted as they investigated where the leak came from. The leak was subsequently repaired and the NRU came up in production at that time, and we focused on making sure the medical community also was made aware of the fact that the medical isotopes would be at a lower level of availability, as they had in the past. And we communicated that to the appropriate people.

With respect to the reports, they were tabled on February 5. I guess I had asked for the reports soon thereafter, when I indicated in the House that I'd be asking for the reports. In fact, I asked for the reports from the officials instantaneously thereafter. They were delivered in three pieces, one from CNSC, one from AECL, and one from NRCan officials. The result of it was that, having looked at all the reports and analyzing both the chronology of what had happened and the reporting that had gone through and the cooperation and the communication—which was very good between AECL and CNSC and NRCan—there was good communication on the issues. But AECL, in cooperation with the CNSC, will introduce voluntary disclosure of reportable events at the Chalk River labs on a going-forward basis, and in fact on February 19 AECL will be at a hearing with CNSC and will be speaking more about disclosure of events at Chalk River.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister.

Thank you, Mr. Regan. Your time is up.

We go now to the Bloc Québécois, to Madame Brunelle for up to seven minutes. Go ahead, please.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good day, Minister. Congratulations on your appointment. I wish you all the best in your endeavours.

I would like to discuss the strategic review of AECL. When Auditor General Sheila Fraser appeared before the committee in January 2008, she reminded committee members that AECL had not had a strategic plan in place for many years and that the consequences of this could be negative. The then minister had mandated the National Bank to evaluate the situation. Three possible options were weighed: the status quo, partial privatization and full privatization.

In Budget 2009 which you discussed with us, approximately $350 million has been budgeted for AECL, including $135 million for the development of the ACR 1000, the Advanced CANDU Reactor. In light of circumstances, the committee is greatly concerned about the possible scenarios of partial or full privatization.

As parliamentarians, we would be entitled to obtain the report on this strategic review as quickly as possible. I'd like to know when we can expect to receive a copy of the report. The mandate to carry out this strategic review was awarded some time ago, specifically, in February 2008. Have you come to a decision about the future of this Crown corporation?

[Lisa Raitt, Conservative, Halton, ON]

Thank you for your questions.

I will start with your last question, which was whether a decision had been taken. The answer is no, a decision has not been taken with respect to those matters associated with AECL that you speak of when we refer to the National Bank report. What I can tell you is that in approaching the issue of AECL, there are three important considerations that one must have in mind. Number one is the one I spoke of first, which is that with respect to the total energy mix for Canada and the pursuit of the ideal of having 90% emission-free electricity by 2020, one has to look at all the mix, and nuclear energy is an important part of that mix. An important piece for us in moving toward a cleaner, greener society in Canada is having nuclear as part of it.

The second part that's important, as well, is one I mentioned earlier, which is this burgeoning.... Actually, it's there. It has been there for 50 years and has continued to grow. It's an important part of the Canadian fabric and an important part of the Canadian economy, and that's the nuclear industry itself. It's a very strong industry. It is incredibly technical. We have great pride in our engineers here in Canada. We have wonderful nuclear engineers. We have great manufacturing facilities. We have excellent abilities to do research in the nuclear field, and in fact, in many ways Canada has been a great leader in the world in nuclear energy, both in terms of reactors and in terms of nuclear medicine. We have very much to be proud of. You have to consider this when you look at the concepts and issues related to nuclear energy.

The third piece is the business piece, which is the part about the fact that the government is representing the citizens of Canada as a shareholder in AECL, which is a crown corporation. In that vein, the taxpayers of Canada have to ensure that there is good value for money within the company and that whatever investment they're making in AECL, through the budget or through research or through education or through technical advances, is beneficial to the Canadian taxpayer and is a good return on investment.

Those are the three policy drivers through which you view Atomic Energy Canada Limited.

The government announced the review of AECL last year. It was part of the due diligence and the commitment to good governance and responsible management that came out of an unprecedented event in December 2007, when unanimously the House, in committee of the whole, indicated that it was extremely important to open up the NRU in order to continue the production of medical isotopes. The overall objective is to bring forward options to strengthen the corporation and to build on our nuclear expertise in a changing marketplace.

National Bank Financial has provided external financial advice on potential options, or the best position, for AECL in the future. We'll take their recommendations into consideration as a key element. That would go, of course, to the part I spoke of in terms of whether there is a good company entity there to ensure that it is not only part of the energy mix, is not only part of fostering the nuclear industry, but is a good return on investment for the Canadian taxpayer.

It's premature to talk about the outcome of the review. It'll continue for some months. It is with the department officials who are reviewing it. We'll be considering the recommendations when the recommendations and the review are concluded.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I see that you have experience as a business woman. Understandably then, a strategic plan is certainly very important to you, as someone responsible for making substantial investments.

I was asking whether or not you had received this report. You answered that you had not yet received it and that you had not yet made any decision as to the future of this Crown corporation. Therefore, I will await further information.

Getting back to the Supplementary Estimates (B), $250,000 has been budgeted to create a special projects team and to fund related activities with a view to completing the full review of AECL's structure and of the Chalk River laboratories. Is this in addition to the National Bank Financial's analysis report? Is this a study that was undertaken a year ago? What exactly is the nature of these supplementary estimates, given that the strategic report, which cost an estimated $1.4 million, has not yet been tabled? What exactly is this team?

[Lisa Raitt, Conservative, Halton, ON]

Thank you very much.

The funding you referred to represents the balance of budgetary provisions carried over from the previous year for an AECL Chalk River laboratory financial structure review. The government announced a review of AECL last year as part of our due diligence and commitment to good governance and responsible management. As I indicated, the overall objective is to bring forward options to strengthen the corporation and build on Canada's nuclear expertise in the changing marketplace. The National Bank Financial has provided external financial advice on potential options to best position AECL for the future. We'll take the recommendations into consideration as a key element; they will help inform the government's decision in part.

As I indicated, it's hard to speak about the outcome of the review, because it's going to continue for some months. It is with the officials right now to study, analyze, put recommendations on, and deliver to us.

[The Chair, Conservative, Leon Benoit]

Thank you, Madame Brunelle. Your time is up.

Mr. Cullen, from the New Democratic Party, will have up to seven minutes.