Finance Committee on May 29th, 2007

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We'll continue with Madam Wasylycia-Leis for seven minutes.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you, Mr. Chair.

Let me just pick up on the last point, because in fact I don't see any sign that the Conservatives are going to voluntarily move to delete this section of the bill. Is there a way we can fix up the proposal in Bill C-52? I'm wondering if it would help to add the words—somehow get the sense across that we want to only give the incentive when we're talking about domestically produced cars. Would that be of merit, at least in terms of domestic production and jobs and industry in this country?

[Mark Nantais]

There's no good angle on this thing in terms of fixing it, in our mind. If we were to perhaps limit that rebate or that incentive to only domestically produced vehicles, then I would suggest it could raise some trade-related issues. It could be seen as a non-tariff barrier to trade, for instance. That's one angle.

This is a program, and again I come back to the literature that exists out there, that has a very high cost for very little return and has a great imposition in the competitive marketplace when in fact companies are competing more fiercely than ever before. Free market competition like that, I would suggest, works far better than trying to enter into the market and manipulate it, particularly when, again, the data shows that Canadians are already making some very prudent decisions about the vehicles they purchase.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I hear what you say, but I may not agree with that. I wouldn't mind hearing from the David Suzuki Foundation or from the Living Oceans Society and having their views on this. In fact, I think the only way we're going to really get a handle on it and get ahead of the game in terms of the future of the planet is by market intervention.

I'm more concerned right now in terms of your presentation from the point of view of Canadian investment. I think we should at least have some agreement around what this will do to discourage investment in the country, what it will do in terms of increasing import purchases, what it will do in terms of Canadian jobs, and what it will do in terms of making Canadian-built vehicles more expensive. I'm looking for a way to apply this model in a way that encourages the economy and is meaningful.

Let me ask both Bill and Kate about this issue of how you intervened to get, or how you achieved, progress in terms of the environment, and then let me get to the question about the Living Oceans Society and marine protected sites.

[Bill Wareham]

The bigger issue is around incentives. I'm going to defer this at some level to some specialists we have at the Suzuki Foundation on this file. I'll be happy to provide the committee with some more details on it in writing.

Incentive is key in this. Unfortunately, other manufacturers took the lead on developing hybrid vehicles and these kinds of things. If we're going to develop a range of alternative technologies, we're looking at incentives.

This program, in our view, is providing a great level of awareness, the discussion. The fact that this program is out there has so many people talking: here are alternatives; there's a way to do this differently; we need to reduce things. It's as much an education, awareness-raising thing, which I hope can lead to some of the other changes.

I don't disagree with Mark on some of the things that should be considered as well, and some of the issues that have to be dealt with, but we believe a program is necessary to drive incentive and change within industry in Canada, and that the Canadian public is looking for this and I think would welcome some significant shifts in industry in Canada to mirror some of the other manufacturers.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you. Let me ask Kate for her views on this.

As well, I would like you to take the opportunity to tell us by how much we're missing the boat, so to speak, in terms of dealing with dead oceans or near-dead oceans.

You said you asked for the minimum, $600 million, just to work on protected marine sites. Is that right?

[Kate Willis]

It's more than that; $600 million, in our mind, would actually comprehensively cover an integrated management planning process for the five ocean areas that have been identified in the oceans action plan.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

And this budget only provides what?

[Kate Willis]

It provides $19 million, with no funds identified toward integrated management. That $19 million is supposed to cover pollution prevention, establishment of marine protected areas, enforcement and surveillance, and anything else in terms of protection.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

So it's minuscule. We always say a drop in the bucket, but this is more like a droplet in the ocean.

[Kate Willis]

It is; it's a drop in the proverbial ocean.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Or a teardrop; it makes you want to cry.

I'd like you to express what will happen as a result of not having some more intervention.

[Kate Willis]

I can give a really good example. I was just in an area of British Columbia called Rivers Inlet, which is a small coastal community in the central coast of British Columbia. This is a community that once had 6 million salmon running in its inlet. It had an oolichan fishery, which is crucial to the first nations in the region. That salmon fishery is gone; it has been closed down completely. The oolichan didn't come back last year.

There's a sports fishing industry there. As Bill mentioned, sports fishing in British Columbia contributes $500 million to the economy. They felt a hit last year.

So we are starting to see the effects of mismanagement of our oceans resources. We're at a point now where we're increasing industry, we have increases of shipping, we have increases in cruise traffic, we have increases in port terminals. All of these things are good for the economic growth of British Columbia, but that kind of increase is only going to contribute to the questions of sustainability.

At this point, with the direction it's going, there's no management. There are absolutely no plans for how we are going to deal with these increases in addition to fishing pressures and the needs of coastal communities.

As far as we're concerned, we're going down a very slippery slope toward a point where we are not going to be able to handle the conflicts in a productive way, and I think we're fairly close.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Madam.

We'll continue with Monsieur Thibault.

You have five minutes, sir.

[Robert Thibault, Liberal, West Nova, NS]

Thank you, Mr. Chair.

I want to thank all the panellists for participating, especially Mr. Hobson, who was on the same trip I was coming from Nova Scotia.

Mr. Hobson, you've done a lot of studying on the Canada-Nova Scotia accord, and I've read some bits that came out in local papers. In your analysis, what is the cost to the Nova Scotia treasury of this broken promise regarding the Canada-Nova Scotia accord?

[Prof. Paul Hobson]

Well, the number that has appeared in the media is approximately $1 billion—some $950 million to be exact, based on the data I'm using.

What that number represents is the impact of the fiscal capacity cap on Nova Scotia over the period effectively between now and 2013-14. What that $1 billion more or less represents is a complete clawback of the benefits under the additional offsets payment act.

The point in putting that number out was simply to have people understand that there are issues of important principle here with regard to adhering to the accords, but that these are also issues of significant financial import to the province.

[Robert Thibault, Liberal, West Nova, NS]

The province has come up with similar figures, very close, I think, to what you have. The figures I've seen coming out from them were only for the first term of the accord of 2012, but the accord was renewable for another eight years, to 2020. Have you been able to do the analysis of those additional eight years?

[Prof. Paul Hobson]

Yes, we have been able to work these things through. Indeed, the billion-dollar estimate takes it right through until 2019-20.

[Robert Thibault, Liberal, West Nova, NS]

Is that under the assumption of only the existing production fields in Nova Scotia?

[Prof. Paul Hobson]

That's correct. We've not incorporated the possibility of Deep Panuke coming on stream, but should it come on stream in the timeframe involved, the revenue flow to the province would be relatively small, given the way royalty arrangements work. So it should not dramatically affect the results.

[Robert Thibault, Liberal, West Nova, NS]

In the case of the rumoured subamendment or subagreement that we're hearing about, the rumour is that rather than having just one year to play Russian roulette, the premier will be able to take until 2012 to make that decision about going with a new equalization formula or maintaining the equalization payment. Have you been able to do the analysis of each year? Has anybody done an analysis of what would happen if it changed at any time?

[Prof. Paul Hobson]

That's exactly the kind of analysis that I've been undertaking for Nova Scotia, that my colleague, Dr. Locke, at Memorial has been undertaking for Newfoundland and Labrador. Rumours are just rumours, so I don't want to comment on them. I doubt very much that the option will be that a province can move back and forth between a fixed framework and the new arrangements. I don't think that is in the cards in the long term.

What I would suggest, however, is that given that the decisions that have to be made for 2007-08 are in fact straightforward decisions, given the numbers that have been presented to provinces, the issues going forward should perhaps be better studied prior to being locked into budget legislation. So what I would suggest would be the implementation of a task force picking up on the work of the expert panel but now extending to the proposals that are contained in Bill C-52 that would provide greater insight into the actual effects of these proposals. They are not well understood by those of us in the academic community, as far as I can tell, nor are they understood very well by others in the policy community.

[Robert Thibault, Liberal, West Nova, NS]

Ms. Willis, I was involved in the listing of the Race Rocks, and the opening of the hydro vents and the Gully, and I remember the very difficult consultation process with the fisheries and with other users on these issues. If we looked at one of these proposed MPAs, the future ones, if we looked at Race Rocks, how far would $1.9 million get you, on just one of them—not the 15 under consideration, but just one?

[Kate Willis]

I would have to go back and do a real financial analysis to give you a truly accurate answer, but off the top of my head, I'll say it would not get you very far. When you look at what needs to go into designating a marine protected area, you have multiple sectors that have a stake in the area, most notably fishermen. You have tourism operators. You have stewardship groups. You have industry. You have to decide what areas you're going to keep open and what areas you're going to keep closed.

In order to do that in a really meaningful, transparent way, you need to make sure that you have a process in place that adequately addresses the needs of all stakeholders. In order to do that effectively, I would say it's a process that can take up to two to three years to ensure that you get representation from people. Particularly in a province such as British Columbia, you need to fly people from all sorts of different areas, so $1.9 million would go very quickly.

I want to just clarify that this $1.9 million that was allocated wasn't just for establishing marine protected areas. It was also for surveillance and enforcement. It was also for pollution prevention and abatement in addition to establishing marine protected areas. So the reality is, I would say, it is impossible to do all of those things with $1.9 million. It's setting someone up for failure to give them that.