Finance Committee on Sept. 15th, 2009

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

Thank you all for coming here today.

I'll be very quick. I have a question for our friends from the Green Budget Coalition.

On the quality of water, I absolutely agree, and we've invested in it this summer with $50 million from us, $50 million from the region, and $50 million from the province on an upgrade to the Skyway Wastewater Treatment Plant to go to tertiary cleaning of the water before it goes back into the lake. We've also committed $30 million to the cleaning up of Randle Reef, which is one of the hot spots on the Great Lakes. We're waiting for the municipality to come through with their one-third. We're moving forward.

Here's my question. You've talked about a recommended investment of $1.8 billion and then an additional reallocation of $5.2 billion previously committed in the infrastructure funding. Who are you taking the money from to have it reallocated? You say it's allocated already. Who loses out?

[Andrew Van Iterson]

My understanding is that there are still billions of dollars in infrastructure funding that have not been allocated to specific projects, so we leave it to the judgment of the government as to--

[Mike Wallace, Conservative, Burlington, ON]

But you're just guesstimating that. You don't know that for a fact, then--

[Andrew Van Iterson]

It's my understanding from the conversations I've had with Finance that not all of the infrastructure money has been allocated.

[Mike Wallace, Conservative, Burlington, ON]

Okay.

To the Pembina Institute—and this will be really quick—I think you brought up geothermal in the presentation and talked about $5 million. I'm not sure whose presentation it was. But in the U.S. it's costing $30 million U.S. With the land mass not being that much different in terms of size, why is it so much cheaper for Canada to do it?

[The Chair, Conservative, James Rajotte]

Very briefly, Mr. Weis.

[Timothy Weis]

Yes, we probably could use a larger sum. We were looking for what would be potentially achievable in the current budget. One of the issues is that the Americans do have a more established industry and, right now, a larger known resource, so they're looking at refining a fairly detailed map that they already have. This would be the first foray into it in Canada, so it would be the initial cut.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Mulcair, please.

[Thomas Mulcair, NDP, Outremont, QC]

I want to welcome you, and I hope that our committee's work will be fruitful under your continued chairmanship.

I want to begin by saying that Mr. Johnson, whom I have already had the pleasure of meeting and speaking with on the topic he has raised today, is entirely right. My colleague Judy Wasylycia-Leis, the member for Winnipeg North, and myself have had the opportunity of telling him that we support his proposal and find it most interesting. As usual, the devil is in the details. There have to be safeguards in order to ensure that no one can get around or abuse the system, but the idea is positively brilliant, at a time when universities and the health care sector in particular need more assistance. It would be good if we could get things moving.

Mr. Weis, I welcome you here and I congratulate you. I was for a number of years the Minister of the Environment in Quebec and I had the opportunity of meeting a large number of groups. Their interest never varies, but the contribution they make to the public debate varies enormously from one group to another. In Canada, the Pembina Institute is one of the most consistent and most trustworthy when it comes to information and analyses on the environment. This is to your credit because it helps everyone. One can feel that this organization is motivated by a real interest in providing the most reliable information it can. I thank you for your presentation and I will address my comments to you, linking them with two other interventions.

Mr. Cleland spoke earlier about natural gas. He said that he was downstream, contrary to those who are upstream, those who produce natural gas. He suggested a certain number of tax measures in order to make the best possible use of our natural gas, which we have in abundance, as he himself stated.

What are the best strategies to ensure that our natural gas, which is one of the cleaner fossil fuels, is used in the best possible way? You know as I do that some people had floated the strange idea of building a natural gas liquefaction plant opposite Quebec, in order to import natural gas from Russia. I am referring to the Rabaska project. We have enough natural gas here, but we are literally burning it up to produce oil from tar sands.

What are the tax measures we could use to put a stop to the waste of our natural gas and use other sources, preferably as clean, in order to produce oil from the tar sands?

[Timothy Weis]

This might be a question that we can share.

Clearly, natural gas does have an important role as a transition fuel. That's one of the important things that natural gas can be doing. It can be used to displace much dirtier sources of energy, whether it's the development of oil sands or particularly the development of coal power and reducing the amount of coal that we depend on in Canada. To that end, natural gas works very well in the electricity system to help balance technologies such as wind power, for example.

There are provinces, particularly Quebec, where there are large hydro systems that also balance very well with wind power. So it's not something that you want to be using carte blanche everywhere across the country, but particularly in areas that are looking to phase out coal, for example, it is really a strategic opportunity for using natural gas.

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Cleland, what simple tax instrument could be used so that we could stop burning natural gas to exploit oil sands, and use it to better advantage?

[Michael Cleland]

I would start with where you use the most of it. The biggest single place where we use natural gas is in heating in residential and commercial applications. A lot of the equipment we're using today is relatively low efficiency compared to what's available in the marketplace, which is over 95% efficient; a lot of equipment is anywhere from 60% to 80%.

Measures--and they're going to be different depending on whether it's commercial or residential, because it's a different tax system--that create incentives to move that equipment to a higher efficiency level.... Some of the things that are in our proposals here go to things like combined heat and power systems, and hybrid systems, where you're marrying natural gas with renewal sources. There I'm proposing an investment tax credit.

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Jules, when wind energy was mapped throughout Canada, it was discovered that the most constant and dependable wind energy resources were often in areas where the highest concentrations of first nations people were to be found.

Have you attempted to see whether it would be possible to participate in projects such as the one proposed by the Pembina Institute in order to create clean and renewable energy, and by the same token create employment and wealth in first nations communities? Have you examined that possibility with them or with other groups?

[Manny Jules]

Not specifically with Pembina, but I've been working with other first nations groups that have been pursuing wind energy right across the country--in Quebec on the north shore, in British Columbia, and down east.

[Thomas Mulcair, NDP, Outremont, QC]

You are right to mention Quebec, because when Quebec decided to build a 4,000-megawatt wind energy facility, the largest wind farm in North America, it insisted on giving priority to one of the first nations projects, in the Gaspé region.

Mr. Van Iterson, in December 2005, an agreement was signed in Milwaukee, in the United States, in order to protect the Great Lakes and the drainage basin of the St. Lawrence. I signed that agreement on behalf of Quebec. A dozen Great Lakes states, as well as Ontario and Quebec — the two provinces that lie along the drainage basin of the Great Lakes and the St. Lawrence — signed this agreement.

What is missing in that agreement, with regard to your proposal of making better use of and protecting the fresh water resource of that drainage basin?

[The Chair, Conservative, James Rajotte]

Very briefly, Mr. Van Iterson.

[Andrew Van Iterson]

I must admit I am not an expert on that agreement. The Green Budget Coalition is unique in bringing together all our groups, but we also agree only to agree on budget recommendations. We don't have distinct recommendations on international agreements like that.

[The Chair, Conservative, James Rajotte]

Merci.

We'll go to Mr. McCallum. You have five minutes, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair, and welcome to all the witnesses.

I'd like to begin with a question for Mr. Jules.

I think your proposal is very intriguing. As an economist, I can see that it could be potentially very powerful, but I also get the impression that it is fairly extreme. I don't mean that it is necessarily bad. “Radical” would be a better word, because if I understand correctly, if the reserve could sell as much land as it wanted to non-reserve people, then the reserve could effectively sell itself out of existence. My question is whether that is correct, but the second question related to that is, can you describe the attitude of the aboriginal community, the AFN and others, to this proposal?

[Manny Jules]

If the suggestion is that an entire reserve could be sold off, I think that would be highly unlikely. When you consider the size of Canada, Canada hasn't all been developed and neither have any of the provinces.

So what we need in terms of first nation governments is the ability to empower the individual. There is no greater power within the fiscal framework to empower the individual than to enable him to own his own home, to build equity, and to have his choice of buying and selling, because without equity.... In one particular case, it is going to take 73 years for this particular first nation to be able to catch up on its housing arrears. It is completely unrealistic for this country to even consider building every home that will be needed in first nation communities.

On the second point, I have been having lots of discussions right across the country with a lot of different interested first nations groups, particularly in British Columbia obviously, but also with a lot of communities that are involved in what is called treaty land entitlement. When you have a million acres that will be transferred from the provincial government to first nation governments and immediately turned into Indian reserves, losing 90% of its value, there are some questions raised as to why that would be done.

As far as support goes, one of the things I wanted to make sure of--and this goes back to the question of Jean-Yves--is to make sure the work is methodically done and thought out, and with a legal foundation. That is the stage I'm at right now, and I will obviously be going out and intensively consulting with first nation groups, including the Assembly of First Nations.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much. That's quite an exciting project, I would say, and I wish you all the best in your deliberations.

[Manny Jules]

Thank you.

[John McCallum, Liberal, Markham—Unionville, ON]

Turning now to Mr. Weis, I didn't notice anything in your document about carbon capture and sequestration. You made a number of proposals about what funding the government could commit, but you didn't mention that--unless I missed it.

Does this mean that it is, in your view, a low priority as compared with some of the other initiatives that you did mention?

[Timothy Weis]

Well, as I said, there are so many things that need to be done, and urgently; we had to prioritize.

Really, the last budget did commit significant funds to carbon capture and storage, with $1 billion committed, more or less, through the Clean Energy Fund. It's not specifically all for carbon capture and storage, but a significant amount of that will likely go to carbon capture and storage. We have seen significant investments in Alberta and Saskatchewan around carbon capture and storage.

So really, in terms of the renewable power program right now, it's because it's running out of money and because of the uncertainty going forward that it's the number one priority for this particular budget.

[John McCallum, Liberal, Markham—Unionville, ON]

To either Mr. Cleland or Mr. Van Iterson, do you have any comment on that subject of carbon sequestration?