House of Commons Hansard #211 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was health.

Topics

Mining Exploration And Development
Private Members' Business

11 a.m.

Liberal

Ben Serré Timiskaming—French-River, ON

moved:

That, in the opinion of this House, the government should consider implementing a new program of mining incentives which would encourage exploration and development in Canada.

Mr. Speaker, I am very happy to introduce in this House today a motion calling on the government to consider a program of mining incentives which would encourage exploration and development in Canada. First of all, allow me to commend the hon. Minister of Natural Resources for officially declaring a national mining week last month.

This shows that the government recognizes the mining sector's important contribution to the Canadian economy and partly fulfils our commitment to promote at the international level Canadian interests in this area.

I believe that the industry has also done a tremendous job in promoting mining through its Keep Mining in Canada campaign. I want to congratulate it on this important initiative.

I would also like to thank the Minister of Finance for implementing in his 1994 budget measures to allow the deductibility of reclamation funds. I recognize there has been a substantial increase in exploration throughout Canada in 1994 and there is a prediction of a further increase in 1995 to a level of approximately $650 million. Despite this, major problems and impediments still exist to a sound and sustainable mining sector in the country.

Some of the impediments that were identified both in the natural resources committee report, the Whitehorse mining initiative report and by the industry are as follows: insecurity of land tenure either because of the creation of new parks or because of native land claims; flight of exploration capital to third world countries, especially South America; complexity, duplication and delays in issuing permits and environmental assessments; and to a lesser degree, the effect of profit and non-profit based taxes and levies.

Canada needs a minimum of $900 million to $1 billion worth of exploration capital annually to rebuild our ore reserves which have been depleted to a dangerous level.

I would like to state a number of statistics which will clearly demonstrate the importance of mining to the Canadian economy. These facts are based on information from Statistics Canada and Natural Resources Canada.

The mining and mineral related industries employ 335,000 Canadians. Of these, roughly 57,000 were employed in mining, including coal mining, 57,000 in smelting and refining, 85,000 in metal semi-fabrication and 129,000 in metal fabrication.

Mining is the mainstay of employment for over 150 communities. Canada is the world's largest mineral exporter. Mining provides 14.6 per cent of total exports and contributes $11.7 billion to the trade balance. Canada produces some 60 commodities, leading the world in the production of uranium, 28 per cent; zinc, 15 per cent and potash, 34 per cent.

Canada is the world's second largest producer of nickel at 22 per cent; cadmium, 11 per cent; asbestos, 17 per cent; elemental sulphur, 22 per cent; and ranks among the top five producers of platinum, group metals, gypsum, aluminium, copper, lead, cobalt, titanium, molybdenum and gold.

Mining, and resource industries generally, lead all other industrial sectors in productivity. During the last decade labour productivity increased by 103 per cent in mining and concentration, by 87 per cent in smelting and refining and by 32 per cent in metal semi-fabrication. In 1993 mining added $20 billion to the Canadian economy, equaling 4.2 per cent of the gross domestic product.

Canada is the third largest mining nation in the world. For every 10 jobs created in the mining industry, eight more spinoff jobs are

created. Almost 80 per cent of Canada's mineral production is exported. Mining provides 14.8 per cent of Canada's total exports, contributing $9.9 billion to the mineral trade balance.

Minerals and metals account for 60 per cent of the material transported in Canada by rail and through our ports. Ontario at 30 per cent; Quebec, 17 per cent and B.C., 16 per cent, account for more than 60 per cent of Canadian mineral production.

Mining stocks make up 55 to 60 per cent of trading on the Vancouver Stock Exchange; 20 to 30 per cent of trading on the Toronto Stock Exchange and 20 per cent of trading on the Montreal Stock Exchange.

The amount of land used for mining in Canada is less than half the size of P.E.I.

Let me now inform the House of the worrisome trends in the mining sector that forebodes a very uncertain future. Since 1991 Canada dropped from first place to fourth place in its ability to attract international investment in new mines according to the Metals Economics Group in Halifax.

Between 1990 and 1993 Canada saw 44 mines close and only 24 mines open. Canada lost 19,579 mining jobs between 1990 and 1993. In 1970 mining contributed 6.4 per cent of the GDP and in 1993 4.2 per cent. In 1992 exploration expenditures were the lowest since 1967. Mine site investment reached $6.7 billion in 1991 and by 1992 that number was cut in half.

In 1988 the amount of exploration and development money spent in Canada was about $800 million, compared to less than $400 million in Chile. These numbers were reversed in 1992. In 1993 Canadian companies spent almost as much if not more in Latin American as did the local companies.

In 1993 employment in the mineral industry was 335,000, about 2.5 per cent of the total national employment. This is a 3.5 per cent drop from the 1992 figure of 347,000. In 1992 mine investment in Canada was about $3.1 billion, down from 1991 figures by 18 per cent. In 1993 Canada's mineral production totalled $14.9 billion, a decline of 10.8 per cent from the 1992 amount of $16.7 billion.

Canadian companies with budgets of more than $1 million spent close to $260 million on exploration outside Canada in 1993, almost half of their total budgets. This is an increase over 1992 when they spent 40 per cent on their exploration budgets abroad.

Since World War II the cost of fine based metal deposits in Canada rose from $6 million to about $150 million, a 25 per cent increase as corrected for inflation in 1989 dollars.

My motion calls on the government to implement a new program of mining incentives which would encourage exploration and development in Canada. What do we mean by mining incentives? Most people would automatically equate incentives with grants or tax based measures but there are incentives that are much more important than that.

The mining industry does not want grants. It wants a level playing field and a tax system which is truly competitive with the rest of the world. It wants security of land tenure and a certainty of continuity in the rules of the game in terms of issuing permits and doing environmental assessments.

How can the mining industry interest investors when the goal posts keep moving all the time? How can it convince investors to spend hundreds of millions of dollars only to have the property declared a park, as it was done recently in British Columbia with the Windy Craggy property?

Although I recognize that most of these rules fall under provincial jurisdiction, I believe the federal government must play a leading role in bringing all parties involved together. If we want to create more parks in the country, let us do it now and declare them off limits. However, let us also ensure the industry that the rest of the country is open for business and that if it spends exploration dollars it will be permitted to develop its discovery and reap the benefits.

The Standing Committee on Natural Resources conducted extensive hearings with all the stakeholders. The result was nine key recommendations on mining incentives which were almost entirely present in the Whitehorse mining initiative report.

I would like at the present time to present the House with those recommendations:

Recommendation 1: That the federal government, in conjunction with its provincial counterparts, work to remove the structural impediments to mineral investment outlined in the Whitehorse mining initiative final report by the year 2000.

Recommendation 2: That, on recognition of the uncertain long term prospects of the mining sector, the need for a more attractive exploration investment regime for junior companies and the positive impact of mineral exploration activity on regional development and job creation, the federal government implement tax measures in its February 1995 budget to encourage Canadian mineral exploration.

Recommendation 3: That, subsequent to recommendation 2, the federal government introduce a mineral exploration incentive by modifying the Income Tax Act to incorporate a change in the adjusted cost base of flow-through shares from a value of zero to the actual cost of the shares-

Recommendation 4: That in order to enhance the effectiveness of exploration work financed by means of flow-through shares, the federal government enable the exploration activity funded through such shares to be carried out over a period of one full year after financing.

Recommendation 5: That, to assist junior and

or single mine companies, the federal government exempt mineral exploration and development companies without revenue from mineral production, from application of the Large Corporations Tax.

Recommendation 6: That in order to enhance the effectiveness of mineral exploration, core geoscientific funding under existing federal-provincial mineral development agreements, MDA, be preserved under alternative programming.

Recommendation 7: That once initial steps have been taken to improve the investment climate in Canadian mining, the federal government, its provincial and territorial counterparts and the domestic mining industry develop, through consultation, an integrated approach to communicate the positive features of the Canadian mining sector to potential investors.

Recommendation 8: That Natural Resources Canada, together with its partners in the provinces and the industry, establish a national database on active and orphaned mining sites and reclamation work that must be undertaken on those sites.

Recommendation 9: That the Minister of Finance amend the Income Tax Act so as to defer taxation of income generated within mine reclamation trusts until the funds within these trusts are finally allocated for reclamation purposes and that the minister make an announcement to that effect in the next federal budget.

The main thrust of the last federal budget was deficit reduction. It was about putting our financial house in order. It was about getting the fundamentals right so that all sectors of the economy including mining could regain confidence in Canada. I agree 100 per cent with the Minister of Finance.

It would have been very difficult to justify tax breaks or expenditures in one sector of the economy while cutting all other sectors dramatically. However, we must look at the next budget and beyond. While I realise it would be next to impossible to implement all the measures recommended in the natural resources committee report in the short term, there is much we can do without breaking the bank.

Some of these measures are included in the keep mining in Canada 10 point program: establish a process for land use planning that respects mineral tenure to ensure both the protection of Canada's natural heritage and access for mineral resource development; streamline federal-provincial environmental regulations to avoid costly duplication and delays; implement an appropriate incentive to stimulate grassroots mineral exploration; change tax laws on mine reclamation funding to encourage investment in new mines; launch a national initiative to build necessary infrastructure for northern Canada's economic self-reliance.

In conclusion, there are still many Hemlos and Boisla Bays in this country. It is up to us as a government, to the mining industry, to the First Nations, and to environmentalists to join forces in a spirit of co-operation and compromise so that mining can become once again the cornerstone of the Canadian economy.

Mining Exploration And Development
Private Members' Business

11:20 a.m.

Bloc

Bernard Deshaies Abitibi, QC

Mr. Speaker, I would like to congratulate my colleague, the hon. member for Timiskaming-French River, on presenting Motion M-292, which reads as follows:

That, in the opinion of this House, the government should consider implementing a new program of mining incentives which would encourage exploration and development in Canada.

After sitting on the Standing Committee on Natural Resources with my hon. colleague for nearly four months to review the Canadian mining industry, I would say that the government is well aware of the situation of this industry, which is confronted with one of the greatest challenges it has had to face in years.

The fact is that base metal reserves have been dwindling since the 1980s, and these are unlikely to be replenished quickly in the near future, as mineral exploration has declined in Canada in recent years.

The mining industry has repeatedly expressed its concerns to the Government of Canada, which, instead of making the adjustment process easier, is in fact making matters worse by letting the investment climate deteriorate in the mining industry in Canada, as compared with rival countries.

More specifically, the mining industry claims that recent trends in mining taxation have caused a decline in exploration and other investment activities in the Canadian mining industry.

A mining exploration incentive program similar to the one put in place in the 1980s should be implemented, but with stricter controls. In spite of the depletion of base metal reserves, Canada's geological potential is still enormous.

Just to show how great this potential is and how much interest it generates, suffice it to say that, on April 25, more than 700 people, VIPs, guests and employees, attended the official opening ceremony of the Louvicourt mine, near Val d'Or, 2,000 feet beneath the surface of the earth.

This mine, which was started up with $300 million in investments and will provide more than 350 direct jobs for a minimum of 15 years, is the result of a joint federal-provincial initiative, the province being in this case Quebec, to conduct exploration around old mining sites that had already been mined out and were therefore not considered as likely to offer sufficient prospects.

New technologies and adequate financing made it possible to open this mine containing copper, zinc, gold and silver, with an estimated capacity of approximately 4,000 tonnes of ore per day for the next 15 years. Recent finds in adjacent zones could extend the life of the mine to 25 years; it is the largest underground copper mine in Quebec at this time.

In addition, three other major mines will open in the next two years as a result of flow-through incentives from the 1980s that promoted a surge of mine exploration.

This is proof that federal tax incentives must be enhanced by adapting them to those of the provinces, so as to encourage preliminary mining exploration and replace the base metal reserves, in Quebec and in Canada, being depleted.

Such a measure would also limit the impact of the developing countries which, through aggressive promotion campaigns, managed to convince many Canadian companies to concentrate their efforts on mining opportunities at the international level.

Because of this, the Canadian mining sector is getting smaller. This, in turn, has a major impact on the Canadian economy as a whole, as well as on many regional economies which rely heavily on the mining sector.

Mining incentives provided in Canada are not less attractive than those existing in most other competing countries. Yet, these incentives do not generate enough preliminary mining exploration activities to replace the reserves of base metals being depleted.

In the meantime, some developing countries have many high quality mining projects on the go, either on the surface or just under it, and they currently do not need incentives to promote their preliminary mining activities.

It is therefore necessary to intensify preliminary mining exploration in Quebec and in Canada. The solution could be to improve the overall international competitiveness of mining investments in Canada.

To that end, it is essential that all levels of government strive to create a favourable investment climate. This includes the following measures: first, improving environmental regulations and the time required to deliver mining licences; second, improving land access and land use, as well as the tax provisions which relate to income and which are not based on profits; third, having a positive impact on the other costs relating to the operation of a company.

The time has come to take into account the economic impact of the restrictions and prohibitions which were imposed in the eighties regarding land use, and which adversely affect Canada's image as a place to invest. We must look at the economic benefits related to our mineral resources, and we must make major improvements to the process for designating protected areas, as well as to the industry's ability to have a significant impact on that process.

As early as September 1992, in its report on the mineral industry, the intergovernmental working group on the mineral industry identified five urgent issues necessitating government intervention. They were the following: first, stopping the erosion of Canadian producers' competitiveness in certain key sectors of mineral production, including copper and nickel; second, increasing reserves of base metals in Canada; third, finding new ideas and developing technology, policies and programs to make grassroots prospecting more efficient, so that new high calibre mineral deposits can be discovered, like the one at Louvicourt, close to Val d'Or; fourth, reversing the obvious trend among mining investors, including Canadian mining multinationals, of passing Canada over in favour of developing countries in Latin America, Asia, or the Pacific with rich resources; fifth, in general, implementing a policy and regulatory framework that is more conducive to maintaining the viability of the industry and stimulating investment in the exploration and development of minerals in Canada.

Regarding the production costs associated with the main metals, Canada is very competitive on the metal market because of the low cost of operating its mines, which is mostly the result of high productivity levels in the industry.

In fact, the Canadian mineral industry was able to considerably increase its productivity because of the rationalization caused by the recession in the 1980s. The productivity of all sectors of the industry markedly increased as a result of new technologies and new mining methods, which were developed in Canada for the most part.

We must consider future generations. We must prevent the decline of base metal reserves by planning now for the exploration and mining of new deposits to replace those that will eventually be depleted.

I would like to point out that financial incentives, sometimes offered by provincial governments and sometimes by the federal government, exist or should exist, but they should be properly co-ordinated. For instance, assistance for the purchase of mining equipment. In this case, the company should be given a tax holiday of two or three years-the time it takes to build a mine. Quebec does this in the case of new mines but the federal government does not.

There are also regional investment funds. In fact, it costs at least $10 million to do the exploration work on a site that may yield $100 million. However, if there is no money to dig, this does not create jobs. We need regional investment funds to develop local sites.

We also need a consortium. The Fonds de solidarité des travailleurs du Québec wants to invest money in mining development. We are glad this is happening in Quebec, but it could be done in other provinces as well. Mr. Speaker, since you say I have only a few minutes left, I will drop the list of suggestions. I can take them to the natural resources committee.

In concluding, I want to mention very briefly the main points we discussed on the Standing Committee on Natural Resources, namely that the mining industry merits immediate tax relief to help offset the existing structural impediments, to restore some of the fiscal advantages taken away during previous rounds of tax reform, and to boost sagging levels of domestic exploration.

Finally, to enhance investor attraction to flow through shares, historically an important source of investment capital for junior mining firms, it was proposed that the adjusted cost base of such shares should be changed from zero to the actual cost of the shares.

This incentive should be available for five years, allowing time for structural reform to be completed.

Finally, these tax changes, together with the measures I mentioned earlier, would help create a climate more conducive to investment in the mining sector in Quebec and Canada and would help to create jobs.

Mining Exploration And Development
Private Members' Business

11:30 a.m.

Reform

Lee Morrison Swift Current—Maple Creek—Assiniboia, SK

Mr. Speaker, I must confess that I approached the debate this morning with some trepidation because I saw the words mining incentives in the motion of the hon. member for Timiskaming-French River.

My immediate thought was he wants some lollipops for the mining industry. However, having heard the hon. member speak and explain that what he is really seeking is a more sensible and sane regime of mining taxation, a more reasonable regulatory regime both federally and provincially, I support the hon. member's motion and I am pleased to do so.

I would draw the attention of the House to the fact that the natural resources committee held extensive hearings last fall on this very question and came up with nine recommendations that were endorsed by all parties in the committee. Of course the government chose to ignore all the work that was done and all the witnesses we heard in that committee. Perhaps we have learned to accept that. That is the way Parliament works.

Maybe we can revisit some of these things. On the federal side, I would particularly like to see a revisitation of recommendations 4, 5, and 9, all of which deal with taxation and which would not cost the government a great deal of money in terms of revenue forgone but would send a message to the mining industry to indicate that we are in business here to do mining and the mining companies are welcome.

On recommendation 4, which deals with the way flow-through funds are spent, under existing regulations if one raises money through a flow-through issue the schedule of spending is tied to the taxation year. The result of that is that if a company gets its underwriting complete and gets its money right near the end of the taxation year, they then have to rush out and spend it madly before the taxation year has ended. This causes all sorts of grief for the people in the field and it causes huge amounts of money to be wasted.

I have had personal experience with this on several occasions. We must get away from that and allow companies, as was recommended by the committee, the possibility of having a full year to spend the funds once they are raised. This is extremely important, and it would cost the government nothing. It only means a small change in the way the regulations are enforced.

I would urge that we look again at the current taxation system of applying the large corporations tax to mining companies that have no income. There are quite a few of them out there, and if they are doing exploration work and have no income they are obviously either raising more money in the capital market or they are going into debt. This is not recognized when you make them pay a tax on their assets. This does not make sense. It is not good for the companies and it is not good for the country.

The final one that I would like to see brought in, and I hope it will be brought in next year, is our recommendation for changes to the Income Tax Act with regard to the deferring of taxation on income generated in mine reclamation trusts.

If a company is obliged to put money into a trust in order to satisfy future obligations for mine reclamation, surely to heavens they should not be taxed for the income on the money that they do not have, which is what we have now. Let those things be treated like an RRSP, which is what the committee recommended. Again, it would cost the government very little, but it could get us a few new mines and it certainly would encourage the mining industry.

Getting on to some more general matters, away from taxation, we all know that we are witnessing and have been witnessing a progressive decline in investment, employment, and mining exploration over the last five years. On an average, we are losing 6,000 employees per year in the industry and have been for the past five years. Part of it is due to taxation, but most of it unfortunately is due to land use policies, regulatory policies, and the lack of security of tenure. I would put a great big exclamation mark beside that lack of security of tenure.

It is no fun to go out and spend many millions of dollars developing a mining property and then find that because the rules have changed you are not going to be allowed to develop it. The classic example, of course, was the Tatsenshini case in northern

British Columbia, the Windy Craggy deposit, where it was almost absent-mindedly decided by the Government of British Columbia to abandon the traditional Canadian principle of multiple land use and to tell a company that had spent huge amounts of money developing what would have been a mine that would have contributed billions of dollars of economic activity to Canada: "No, you cannot put that into production. It is gone. It is going to be inside of a vast park. We are going to forgo all this potential economic activity and take away your property rights to provide a playground for a few well-heeled tourists". This is economic madness.

Of course the federal government also is not without guilt in regulatory nonsense. When the Kluane Park in the Yukon was set up some 20 years ago, they were advised by their own Geological Survey of Canada that the area had considerable mineral potential and that some of it should be left out for future development. And the government said no, we are going to have it all reserve. First it was turned into a land reserve and it has since been turned into a park. There are potential mineral deposits there, and they are locked away from beneficial use for Canada for untold years to come.

Federal regulations also impinge on a minor scale, which can been very irritating. I can cite a personal experience I had a few years ago in northwestern Ontario. I had to build a bridge across a creek in order to move a drill rig onto a property. I got all the necessary permits from the forestry department and the environmental people. I was ready to go when someone said, "Oh, by the way, you have to have a permit from the coast guard". I thought they were joking, but they were not. This was a little creek about 50 feet wide and about 12 inches deep and I was told that the coast guard had jurisdiction because this was navigable water. I said they were mad. Yes, it is navigable. You can paddle a canoe up that creek; therefore it is navigable water so you need a permit from the coast guard to build your bridge. Surely we can have some changes to that type of regulation to make this a more attractive country to work in.

I could on with this sort of anecdotal material probably for the next couple of hours, but I think members are getting my general message. I do support the hon. member for Timiskaming-French River in his initiative and I do hope the House will ultimately give approval to his motion.

Mining Exploration And Development
Private Members' Business

11:35 a.m.

Liberal

Brent St. Denis Algoma, ON

Mr. Speaker, it is indeed a pleasure for me to participate in the debate on the motion of the member for Timiskaming-French River. I am very, very pleased to support the motion.

The motion calls upon the government to look at the mining industry and what it can do to support it. This motion calls on all sectors of our economy that deal with mining to work together to keep mining in Canada, as the slogan of the Mining Association of Canada reminds us.

On a personal note, I would like to mention that mining is part of my family and part of my personal history. My father was a part time prospector and mine developer. I have fond memories of days up near Shining Tree on his small gold claim. You would probably be interested to know, Mr. Speaker, that the very first mine in Canada was in Bruce Mines, Ontario, in my riding, on the north shore of Lake Huron. It was a copper mine, which was established in 1850. It may not be a fact that everybody knows, but everybody should know this. I thank my colleague for that piece of history.

I also want to say that my home is in Elliot Lake, Ontario, which once was the uranium capital of the world. There is now just one uranium mine left, but it is still very much an active part of the mining community. Even though this mine may possibly close next June, the fact is that mine rehabilitation, which I will cover a bit later in my comments, will keep Elliot Lake in the mining industry for many years to come.

One of the most important things this debate allows us to do, apart from calling on the government to work with industry to make sure that mining remains a strong part of our economy, is to make sure Canadians understand how important mining is to our economy and to our communities.

There are a number of myths about mining. I appreciate the attempts by the Mining Association of Canada to deal with the myths and I would like to help them in that regard. There is a myth that mining has an impact only on remote areas of our country. The fact is that yes, mines tend to be opened up where there are not very many people around, but there are 300,000-plus jobs that are directly related to mining and another 300,000-plus jobs that are indirectly relating to mining. A significant percentage of those jobs, possibly even a majority, are in our cities. Our economy is significantly impacted by mining. We just need to look at the papers every day and see how active the trade is in metals and minerals.

Another myth I would like to dispense is that mining will always be here and will always be part of our economy. However, that is only true if we continue to look for new reserves of metals and minerals. It is not the kind of thing we can just ignore and pretend that sometime in the future we need not worry about our reserves of these natural resources. We must always work diligently to maintain our inventories.

There is the mythology that mining is environmentally damaging and that the industry is irresponsible. This is also not true. Tremendous strides have been made in the mining sector and in mining communities to deal with the sometimes temporary damage that must necessarily take place in the landscape. The Canadian mining sector and miners have made a commitment to preserve the environment and to make sure that when a mine is closed down reclamation is put in place to return the land to a near natural state. Those initiatives have been tremendous in Canada. Canadian

mining companies and miners, who are among the best in the world in their business and work, have done a great service to our country and to the world in terms of leading in environmental protection.

Another myth I would like to deal with is that mining is a low-tech industry. Well in fact mining is very high tech. I mentioned a moment ago that Canadian miners are among the best in the world. They are among the best in the world because the mining sector is very high tech. In fact, innovation is taking place all the time.

Members might be interested to know that for the output of a million dollars of product it takes half the manpower resources in the mining sector compared to the manufacturing sector at large. This is an indication that in order to compete in the world and to produce metals and minerals at prices that are competitive we have to utilize and invest in high technology. We have done that in this country.

I would like to come to what the federal government is trying to do in its efforts to support the mining sector. There are many programs. I know we are being called upon at various times to put more money into the sector through tax incentives. This motion today does not call for those specific measures. We do hear from time to time that there should be more tax measures in support of the industry.

In fact much leadership is now provided by the federal government in terms of support for the mining sector. That leadership has led to partnerships which set an example for the entire world. In my own community of Elliot Lake the CANMET laboratory is doing some leading edge research on mine rehabilitation.

Under CANMET and in partnership with stakeholders in the mining community we have MEND, the mine environmental neutral drainage program. This is a major partnership to ensure that the acid produced from mine tailings is minimized and that there is no damage to the environment. This kind of research can help the world. There is mining development around the world and Canada is a leader in terms of protecting the environment. We must show to the rest of the world that there is a way to mine properly and to preserve the earth.

The federal government is also involved in the aquatic effects technology evaluation program. This program determines through our satellite technology what kind of impact mining is having on the environment. It helps industry in terms of preparing environmental assessments and resolving problems.

The leadership we are seeing in the mining sector in co-operation with the federal and provincial governments is quite amazing. I was at the Sudbury 95 Mining and the Environment conference just last week. I was impressed. The conference was sold out. People came from all over Canada and around the world. Every continent was represented. The interest in responsible and sustainable mining truly impressed me.

This leads me to the one single point I would like to make in all of this. The Mining Association of Canada in its outline of what kinds of things the federal government can do to assist says that an important first step is a sound mine reclamation policy. It is interesting that the first thing it says is mine reclamation. It is not saying the finding of more minerals and metals or tax incentives to assist in the milling and processing of metals and minerals. No, it is saying the most important thing is mine reclamation and I have to agree. Mine reclamation and mine rehabilitation is the way to go.

My colleague, the member for Timiskaming-French River, mentioned that we have been asked to consider the tax status of interest earned on the mine reclamation funds. I know this is a touchy issue. While the Minister of Finance has not committed himself or the government to make moves now on this or any other tax measure, his mind and ears are open. He is listening. We have an ongoing dialogue with him and the Minister of Natural Resources to ensure that the tax regime that impacts the mining sector is proper, appropriate and productive.

I want to commend the Mining Association of Canada for putting reclamation first. This government did respond, as I would like to remind the House, in the 1994 budget by providing that funds put into a mine reclamation fund would create a tax deferred situation so that taxes would not be paid right now on funds invested in mine reclamation. How we treat the interest in those funds is a debate that we would want to continue with the industry. I would point out that the interest saved by the industry because of the tax deferral is something that is a benefit in its hands.

What is the future of mining in this country? Fundamentally it is based on the prices out there for metals and minerals. My colleague beside me knows about farming and perhaps a little bit about mining too. He knows in farming that it is the prices which really count the most at the end of the day and at the end of the season. It is the same thing in mining.

We have seen a tremendous increase in mining investment over the last few years. In 1993 it was some $500 million of investment. We expect this year to be up into the mid or high $600 million of investment. We are not as high yet as we were in the early 1980s but the trend line is right.

We can compete with the rest of the world. We can compete because we have the best miners in the world. We have the best mining companies in the world. We have an attitude toward mining and the environment which is a kind of leadership that makes me proud to be a Canadian, to have a little connection to the mining

industry through my community, my father and my own few summers at Inco in Sudbury.

In conclusion, I too call on my colleagues in this government to pay attention to the mining industry, to continue partnerships, to continue finding ways that will ensure that mining is an integral part of our national economy for generations to come and, I would suggest, indefinitely. We need those jobs. We need the economic benefits for the communities involved. I am very pleased to be able to say a few words and encourage my colleagues in this House and all Canadians to be supportive of the mining industry in this country.

Mining Exploration And Development
Private Members' Business

11:50 a.m.

Liberal

Bob Wood Nipissing, ON

Mr. Speaker, I am pleased to rise today to add my support to the motion put before this House by the hon. member for Timiskaming-French River.

The major topic we are addressing today is the importance of the mine manufacturing industry in our nation. Like my other colleagues, I feel it is necessary to point out the importance of the mining industry to the Canadian economy.

I suspect that a number of hon. members in the House, particularly those from urban areas, do not realize the impact that the mining industry has on our economy. The facts clearly show that the industry is a key component of the national economy.

In 1993 mining products represented 15 per cent of Canada's total exports which resulted in a $10 million trade surplus. This industry contributes approximately 4 per cent to the gross domestic product of the nation. In addition it may surprise many members of the House that 60 per cent of all Canada's rail and sea freight is directly related to the mining industry. While these economic statistics are very impressive, it is also important to look at the central role this industry plays in the lives of individual Canadians.

The industry directly supports approximately 100,000 high paying skilled jobs in mines across Canada. The future of about 150 Canadian communities is dependent on the success of their local mines. These single industry cities and towns are reliant on the continued development of the mining industry to ensure their very existence. Hundreds of thousands of Canadians live in these communities. They are keenly aware of the importance of preserving our mining industry.

Having stated the importance of mining to so many communities in the country, it may interest those present today that there are no mines operating in my riding of Nipissing. Northern Ontario is rich in mineral deposits. However my riding does rely on an abundance of subsidiary industries. There are no ore deposits and that is why I am speaking in favour of the motion designed to assist the expansion of the mining industry.

The answer is that the manufacturing spinoffs from other mines in the region are a driving force to the riding of Nipissing. Those familiar with the industry may recognize some of the major manufacturing exploration companies in my riding, such as Boart Longyear, Warren Equipment Ltd., JKS Boyles Ltd., and J. S. Redpath Ltd. These companies are all located within the city of North Bay and employ a large portion of the local workforce. However the importance of the continued success of the mining industry extends beyond these big players.

The database of the Mining Association of Canada lists no less than 25 companies within the city of North Bay that manufacture or supply products related to mining. These products range from diesel electric locomotives to specialized spare parts, to core drilling and drill bit supplies.

The point I am trying to make is that there does not need to be a mine in one's community to benefit from the mining industry. I suspect that virtually every member of this House has a company within their constituency that directly or indirectly has business within this industry. In Ontario specifically, the 1994 study of Ernst & Young found that about 72,500 people are employed by direct or spinoff jobs resulting from mining.

I believe the facts which I have presented illustrate the importance of the mining industry to Canada. It has become necessary to act to protect this crucial industry.

As others have stated, the mining industry has suffered serious setbacks in recent years. Low mineral prices and a worldwide recession caused job loss and restructuring within the industry. To stay productive, many engineering manufacturers and exploration companies expanded their operations to foreign markets. The initial pain which resulted from the changes has been offset by the benefits of exporting to new markets. Nonetheless, these companies cannot survive on exports alone.

The key market for most of these companies is and will continue to be the domestic market. Canadian mines are the primary buyer of Canadian mine manufacturing products. This is due to the natural advantage of proximity and the fact that many of these Canadian products are technically superior.

This design and engineering superiority is the result of years of research and development which occurred during more prosperous times. In order to maintain the advantage especially in cutting edge technology, we must ensure the future viability of the Canadian ore reserves.

The motion and the recommendation suggested here today by the hon. member for Timiskaming-French River addresses many of the issues needed to revitalize the Canadian mining industry. Foreign mines are not necessarily prospering because they have larger or better ore reserves. They are prospering because the

investment climate in those countries is such that the mines can be developed and exploited with a higher expectation of profit.

Many foreign governments have acted to attract investment dollars through tax breaks and incentives. In Canada one of the chief disincentives to investing in mining is the high non-profit taxes and other charges which artificially increase the cost of doing business here. This has hindered our ability to attract new investors while at the same time companies operating here have had to make cuts to other areas in order to ensure their profitability.

One of the key areas that has suffered is exploration. This is a grave tragedy because without exploration there will be fewer discoveries of ore deposits and therefore fewer new mines. If this continues, the mining industry in Canada will die a slow and painful death along with most of the associated manufacturing industries.

The motion before the House today asks us to consider making changes to the investment climate as it relates to the mining industry, particularly in the area of mine exploration. What is proposed is not radical. It calls for the implementation of the majority of the recommendations put forward by the natural resources committee of the House.

In truth, by encouraging the exploration for and the development of mines the government will be creating jobs and stimulating the economy which can only serve to increase revenues. Most important, by encouraging exploration we will be increasing the probability of finding new ore deposits. These undiscovered resources represent the future of the Canadian mining industry. They will be the mines of the next century.

If we do not prepare the way for its future then I fear our mining industry will falter. If the mines fail then I expect the small and medium size companies manufacturing and supplying mining materials will not survive. These are the companies which support the local economy in my riding of Nipissing and it is for this reason that I speak in favour of the motion today.

We as parliamentarians must act to ensure the future viability of the mining industry in Canada. Motion No. 292 represents an effort to address the fundamental problems facing the industry today. If we make it more attractive for investors to bring their money here or to keep it here, then we will be assured that the process of the exploration and development of mineral resources will become healthy once again.

Canada is a world leader in mining and mining technology, but this position has been challenged in the last decade. I am supporting the motion today because I believe it represents one of the steps we need to take to recapture a position we have rightfully earned.

Mining Exploration And Development
Private Members' Business

Noon

Liberal

Andy Mitchell Parry Sound—Muskoka, ON

Mr. Speaker, as chairman of the northern Ontario caucus I am very pleased to have the opportunity to speak on Motion No. 292 put forward by my colleague from Timiskaming-French River.

Mining in northern Ontario is of historical significance. It has provided significant economic growth in northern Ontario and is the source of a significant number of jobs. It is a very important industry in northern Ontario. The motion talks to the need and the logic of government continuing to support the industry.

Canada's mining industry is the third largest in the world. It employs over 330,000 people and adds over $20 billion to the Canadian economy. The Canadian shield which covers northern Ontario is one of the richest ore bodies in the world. We produce over 60 different commodities. We have almost 500 mines and quarries. Unlike many other industries, when jobs are created in the mining industry there is a spinoff effect of almost 6:1 as compared to several others where it is 2:1 or 3:1.

However, mining is different from many of our resource based industries. It is not a renewable resource. One thing that is known when a mine is open is that eventually it will close. That is why it is absolutely essential that we search out, seek and explore for new supplies.

Canada is fortunate to have the reserves. We can continue to mine far into the future but we need to take action. We need to provide the incentives that will enable our companies to go out there to search out these areas of new supplies. Government should and will create a climate in which the private sector will be able to do so. Government needs to invest in exploration and in development.

There are three broad areas in which we should be doing this. First, I mention creating an environment that allows the industry to prosper; second, creating a tax regime that is conducive to exploration; and, third, providing technological and other assistance to the industry.

In respect of the environment, creating the budgetary climate in which business and industry as a whole can prosper is important. Our budget of last February brought in government expenditure controls and brought in a firm plan to reduce the deficit. It will help not only the mining industry but all industries in Canada.

Trade must be encouraged and international barriers must be decreased and relaxed. The Ministry of Natural Resources program to encourage trade by going to Europe and Asia and explaining to the world what is available in Canada is an important initiative. We have to go out there to create an environment by co-ordinating environmental assessments between the federal government and the provinces and to provide certainty to companies so that they

know how long and exactly what is going to be necessary to develop a particular find.

We need to create a tax regime in the country that is competitive with the world so that when a company is deciding to invest in exploration it will choose Canada because it receives treatment that is equivalent or similar to that in the rest of the world. I am referring to things like accelerated depreciation, research and development tax credits on technical research, and moderate source deductions. We need to do something about source deductions such as our reduction in the UI premium. We need a competitive tax regime on profits. As was mentioned earlier by one of my colleagues, contributions to mine reclamation were made tax deductible in 1994. We need to look at the income earned within those funds being tax deductible.

We need to help the industry in terms of technology and other areas. Seeing as we are coming to a close of private members' hour, let me conclude by saying that we need to support the mining industry. It is a large employer and important source of international trade. For many areas of rural Canada, including northern Ontario, it is the backbone of our economies.

Mining Exploration And Development
Private Members' Business

Noon

The Acting Speaker (Mr. Kilger)

The time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 93, the order is dropped to the bottom of the order of precedence on the Order Paper.

Orders of the day.

Mining Exploration And Development
Private Members' Business

12:05 p.m.

Liberal

Herb Gray Windsor West, ON

Mr. Speaker, I move-

Mining Exploration And Development
Private Members' Business

12:05 p.m.

The Acting Speaker (Mr. Kilger)

Order, please. In terms of process I am calling for orders of the day. The table officer will indicate what those orders are and then I will deal with the matter of recognizing the government House leader.

The House resumed from May 31 consideration of Bill C-76, an act to implement certain provisions of the budget tabled in Parliament on February 27, 1995, as reported (with amendments) from the committee; and of Motions Nos. 20, 21, 22, 75, 76, 77 and 78.

Budget Implementation Act, 1995
Government Orders

12:05 p.m.

Windsor West
Ontario

Liberal

Herb Gray Leader of the Government in the House of Commons and Solicitor General of Canada

Mr. Speaker, I move:

That, in relation to Bill C-76, an act to implement certain provisions of the budget tabled in Parliament on February 27, 1995, not more than one further sitting day shall be allotted to the consideration of the report stage of the bill and one sitting day shall be allotted to the third reading stage of the said bill and 15 minutes before the expiry of the time provided for government business on the day allotted to the consideration of the report stage and on the day allotted to the third reading stage of the said bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and in turn every question necessary for the disposal of the stage of the bill then under consideration shall be put forthwith and successively without further debate or amendment.

Budget Implementation Act, 1995
Government Orders

12:05 p.m.

The Acting Speaker (Mr. Kilger)

Is it the pleasure of the House to adopt the motion?

Budget Implementation Act, 1995
Government Orders

12:05 p.m.

Some hon. members

Agreed.

Budget Implementation Act, 1995
Government Orders

12:05 p.m.

Some hon. members

No.

Budget Implementation Act, 1995
Government Orders

12:05 p.m.

The Acting Speaker (Mr. Kilger)

All those in favour of the motion will please say yea.