Finance Committee on Oct. 19th, 2006

[Pierre Paquette, Bloc, Joliette, QC]

Some even become members of Parliament.

[Dr. Chad Gaffield]

Thank you.

[Pierre Paquette, Bloc, Joliette, QC]

That's unusual, but...

[Dr. Chad Gaffield]

That's true.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. May, I wasn't at all familiar with your organization. I read your document and it's remarkable, but, in it, you make no particular demands.

Are you appearing before the committee as a preventive measure, to ensure that government assistance won't be cut, or do you have a specific request to make?

[John May]

What we've asked for, sir, is that our budget be restored to about the $7 million it was four or five years ago. At this point we're operating on $4.5 million. We were at $6 million for the period that ended March 31, 2006, and we'd like to be put, if possible, on a more stable funding basis. Over the last three or four years we've been funded sometimes annually, sometimes by the half year, sometimes quarterly, and literally sometimes monthly, which makes it difficult to deliver 110,000 computers every year.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir.

We continue with Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair. I'll start with Mr. Stothart.

Mr. Stothart, you made two specific recommendations relating to what you term the crisis in reserves. One was prospecting assistance and the other to adjust the definition under the tax act.

Can you just talk briefly about the importance of the government investing in the mapping and so forth of these reserves for northern communities and Canada's north in general for the prosperity of those regions?

[Paul Stothart]

Yes, thank you.

The example I mentioned in my remarks--and we will be submitting our formal submission to all of you and to the minister next week--is the case of Nunavut. About 73% of the territory is unmapped in terms of geological mapping, yet there's a lot of global interest in that part of the world, uranium and diamonds, etc., and this is really a basic infrastructure that a government has to provide.

Companies are used to looking for needles in haystacks, but they need to have a sense of where the haystacks are, and that's what geological mapping provides. That's why it's a basic investment of countries around the world that want to attract this.

The Geological Survey predates Confederation, in fact, and the problem is the investment, the money for that organization and for geological mapping has decreased by quite a bit over the last fifteen years. We would like it increased so that a more active geological mapping program and quality mapping can exist.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

I don't disagree with you. If we want them to look for a needle in a haystack, let's point them to the hayfield. Unfortunately, I don't have a lot of time, but I do agree with you.

Ms. Taylor, I think partly in making the recommendations you're making you might actually be causing a negative, environmentally. I say that because we all toured the Albian Sands project, which is a much newer project. It's much more efficient--they're recycling water, they're burning much less natural gas than the older establishments around them--and I would argue that this place was built primarily because we put incentives in place to encourage the investment to build an efficient plant.

Have you thought about the consequences of that? Oil sands production is going to continue; what may not continue is investment into efficient research and efficient practices.

[Amy Taylor]

Well, I agree that oil sands production will continue, and as long as there's an incentive to become more efficient and save money, which is a large driver of the natural gas savings and the water savings that are taking place within the oil sands, there will be an incentive to invest in those more efficient technologies. In fact, if we spread the investment over a longer period of time, that gives us the opportunity to get further up the learning curve in terms of technological advances. So we might see that in doing so we receive an environmental gain.

[Dean Del Mastro, Conservative, Peterborough, ON]

One of the things that encourages investment for companies to build better technology is having a market for it that's going to buy it. Without that I don't believe it will happen. Regardless of whether it was the Prime Minister from Quebec who put this policy in place for the oil sands or the current one, who happens not to be from Quebec, I wouldn't recommend this specific change.

One thing my colleague mentioned was useful life. We looked at a specific pump that's used in the conventional oil part of the drilling industry. It lasts three years on a conventional oil rig. It lasts twelve weeks in the oil sands; it's a rugged environment.

When we're going to set up a CCA rate—and by the way, if they claim all their CCA this year, next year they pay full tax—we are getting more investment. You said a dollar today is worth more than a dollar tomorrow. Well, no dollars today means no dollars tomorrow. I'd ask you to keep that in mind.

[The Chair, Conservative, Brian Pallister]

Merci beaucoup, monsieur.

We're on to Mr. McKay now.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Ms. Taylor—you seem to be quite popular today—if you utter the phrase “carbon tax” around here, Pavlov's dogs go into full howl mode. Yet you can't continue to treat the atmosphere as a free waste disposal unit. We've come to that conclusion with respect to water, that somehow or other there has to be a cost attributed to what heretofore had been a free good.

What is the Pembina Institute's position with respect to the abuse of the atmosphere generally, not only with carbon dioxide emissions, but with NOx, SOx, and all that whole palaver of stuff? How would you use market instruments to recognize that we can no longer use the atmosphere as a free dumping ground?

[Amy Taylor]

What we'd like to see is simply that prices reflect true costs, and that means financial costs and environmental costs as well, so that when a company is making a decision about an investment or an expansion or whatever the case may be, the bottom line they're looking at doesn't consider just the cost of the equipment, but looks at the cost of the environmental impact as well and incorporates that into the decision. If the costs are too high, the expansion of the project simply doesn't go ahead.

[John McKay, Liberal, Scarborough—Guildwood, ON]

How would you drive that to the bottom line?

[Amy Taylor]

You can do that a number of ways. You can do it through stricter regulation; you can do it through environmental taxes, where you actually impose a cost directly; or you can do it through permit trading. There are a number of different options available for internalizing those costs.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Would you put the cost at the production end or at the consumption end?

[Amy Taylor]

It would depend on a lot of factors, but administratively it's often easiest to impose a tax on the fewest entities. So you might do it, in the case of oil sands, at the well level, and then have it be passed on, so that the incentive is passed down.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You propose in your paper a trading regime of credits. I'm assuming that's on the assumption of Kyoto being in place. If Kyoto were no longer in place, is your presumption of a trading regime relevant any longer?

[Amy Taylor]

A trading regime can still be a very efficient way to reduce greenhouse gas emissions; Kyoto or not, it's still an efficient policy for reducing greenhouse gas emissions.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Is this a domestic trading regime?

[Amy Taylor]

It could be domestic, or it could be with other partners through a separate agreement, or that kind of thing.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Were you overly bothered by buying cow farts in Kenya? That was one of the ways in which you did it. You bought a farm in Kenya and bought up the credits, and therefore you didn't do anything for the atmosphere other than—

[Amy Taylor]

Right. We'd certainly like to see emission reductions take place at home in Canada, but from a climate change perspective it doesn't actually matter, as long as the emissions are reduced at the end of the day, because it's a global issue.