Finance Committee on Sept. 30th, 2009

[The Chair, Conservative, James Rajotte]

Ms. Melhorn.

[Margaret Melhorn]

I'm not sure I understood the question completely. Certainly we are interested in participating in discussions about the regulatory regime.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We'll go to Mr. Pacetti for a question or two.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

A quick question, Mr. Des Lauriers. In your presentation, in your brief, you speak of using the increased funds in order of priority, first on housing, then food subsidies, health, and then social services, but nowhere do you speak about education. We've spoken quite a bit about education. I want to hear your viewpoint on education and how we can improve that, or where that would lie in your priorities.

[Jean-François Des Lauriers]

Well, obviously there was a limitation on the number of recommendations. We were asked to put three forward, and those were the three top ones.

Education certainly should be included, and maybe you'll bracket it into health and social services. Education definitely has to be in there.

Just to give you an example of the situation regarding education for Nunavut, Nunavut Tunngavik Incorporated, the corporation that looks after the land claims settlement in Nunavut, is suing the federal government for $1 billion. That is based on the Nunavut Land Claims Agreement. Article 23 of that agreement states that within a certain period of time—I think it's 10 years—the government workforce of the Government of Nunavut will be 80% Inuit. Where is it now? I think it's probably somewhere around 20%. The reason for that is there are not enough opportunities for education for the Inuit and they can't access the jobs within government because they don't have the education to get them there. So NTI is suing the federal government for $1 billion for failing to live up to its commitment under article 23.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

In your opinion, is it up to the federal government to set up that educational system? I'm talking about primary and secondary schools.

[Jean-François Des Lauriers]

No.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Or is it a failure of the Nunavut government?

[Jean-François Des Lauriers]

Yes, it's a provincial or territorial responsibility. I think some of the presenters have made that clear. I fully agree that it's not up to the federal government to run the education system. But certainly it's up to the federal government to ensure that the territories have the necessary funding to run the education system in their jurisdiction.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

I want to address a few issues here. I want to thank you all for your presentations. This is my second time in Yellowknife. My first time, I actually did a side visit to Diavik diamond mine, which gave me some sense of the resources up here and also of the opportunities and challenges. It's wonderful to be back here.

I have a couple of comments on the northern residents deduction. We've heard that message loud and clear, so I know it will be something this committee will certainly discuss when we deliberate in November as to what to present to Parliament as a committee.

With respect to the EI board of referees situation, you don't need to comment, Ms. Cherwaty, but if we could get some more information on the cost, it's a very reasonable recommendation. If the committee could have some background on cost or any other details, that would certainly be helpful for us.

Yesterday we did hear some talk about the mineral exploration tax credit, about not having this annual discussion about whether or not we ought to keep it. I'm going to give you an opportunity, Mr. Connell. I assume I know your response will be that you would agree with others in the industry that this should be made on a permanent basis rather than having the debate every year.

[Larry Connell]

That's right.

[The Chair, Conservative, James Rajotte]

Okay.

I have two larger issues. I hope I'm pronouncing your name correctly, Mr. Simailak. First of all, with the four portfolios, I'm wondering what you did in your spare time—transportation, economic development, energy, and finance. You said something that really struck me. You said, “Canada is investing billions in gateways to the west, the south, and the east. We urge you to consider investing in gateways to Canada's north.”

Obviously there's a development agency here in the north now, but the gateway comment hit me because when we were in Vancouver we did a tour of the port of Vancouver. The person there told us that by putting together the Asia-Pacific gateway, the last two governments were able to fund a lot of infrastructure projects under the rubric of that gateway initiative. So instead of the government doing one-offs, there was an overall strategy.

You mentioned the airport, which as Mr. Dechert said, seems eminently reasonable. There was infrastructure funding that needs to happen above and beyond a per capita basis, which the deputy minister talked about. And then the deep-water port was mentioned. I think that's what you're recommending, but is that what you're recommending as a northern gateway strategy, similar to what has been done with the Asia-Pacific gateway?

[David Simailak]

Thank you, Mr. Chair.

Every community in the south, be it a large or small city, a town, or a village, takes it for granted that Canada is going to invest in infrastructure in their community--ports, roads, highways, or whatever. We can't take that for granted in Nunavut. Baker Lake has the only highway in all of Nunavut. It's 109 kilometres long and privately owned. We don't have ports in our communities. Our capital has been asking for support to build a deep-sea port. That hasn't happened yet. Baker Lake has a little wee dock that we built ourselves, and Agnico has been having a very hard time unloading their barges with all of their supplies.

There is no infrastructure that will lower the cost of living in Nunavut. There has been talk for many years about building a highway from Nunavut to Manitoba. Look at it this way: most of the money you invest in Nunavut will go back to your constituencies anyway through the purchase of materials and supplies, or whatever we need in Nunavut. We buy it all from your constituencies in the south.

[The Chair, Conservative, James Rajotte]

I certainly accept that.

Mr. Connell, you may want to comment. Is it better to have an overall gateway strategy that funds projects than have communities approach the federal government on a one-off basis asking for funding for an airport or a port? Is that doable and feasible with three territories?

[Larry Connell]

I think the three territories have to be taken separately. They operate separately. I can only speak for Nunavut--and I don't speak for the Government of Nunavut--but I think there's a capacity problem. The government is underfunded and doesn't have the capacity to even chase these opportunities. Industries are arriving and the resource sectors are there. Mineral deposits throughout the north aren't being developed due to lack of that infrastructure or gateway. I would support the concept of a gateway strategy.

[The Chair, Conservative, James Rajotte]

It has to distinguish among the three territories. It can't be one over all.

[Larry Connell]

I don't believe it will work as one over the three territories.

[The Chair, Conservative, James Rajotte]

Okay. I appreciate that.

I want to go to the Pembina Institute and the non-renewable permanent fund. We have one in Alberta, so that seems like a sensible recommendation.

On the royalty rates, is there a concern? We recently adjusted them in our province and seem to have driven business into Saskatchewan, which is where most of the drilling is occurring now. Is that a concern? Maybe I'll ask Ms. Melhorn or others to comment.

I would just sort of caution you about changing the royalty rate structure. A lot of companies like Crescent Point left Alberta. It's now in the Bakken valley in Saskatchewan. I don't know if you want to address that.

You may want to address the heritage fund as well, Ms. Melhorn. Is this something the Government of the Northwest Territories is looking at implementing?

[Katherine Mackenzie]

On the race to the bottom kind of scenario, our feeling is that if you sell off your non-renewable resources cheaply, they're gone. You'll never get back any barrel of oil that you sell at a low rate. You should set your royalties at a proper rate for the citizens who own the resources. Companies are there and are able to develop the resources and bring them to market, which of course is a critical role. But they shouldn't be able to do it without properly compensating the resource owners.

In our paper there is an example in Newfoundland. At the time, Danny Williams wanted a certain resource structure in place so he put it in. The companies left and then came back 17 months later at the rate he had put in. People like to invest here in Canada. It's stable and we have a strong workforce, in spite of a number of issues with capacity in the north. But there are reasons to invest here, so we don't feel we should sell our resources off cheaply just based on the fear that companies might jump jurisdictions. If every jurisdiction keeps lowering them, where does that leave the citizens of Canada?

[The Chair, Conservative, James Rajotte]

On the wind energy incentive program, is that only for local demand in the territory?

[Katherine Mackenzie]

That's for all northern and remote communities--in the provinces as well.

[The Chair, Conservative, James Rajotte]

Do you mean the northern parts of the provinces?

[Katherine Mackenzie]

Yes, I think the brief is based on the fact that basically all communities are off-grid, for example, in northern Ontario or Nanisivik.

[The Chair, Conservative, James Rajotte]

Okay.

Ms. Melhorn, do you want to comment on the permanent fund, similar to the heritage fund, and the royalty rates issue at all?