Finance Committee on Oct. 26th, 2011

[The Chair, Conservative, James Rajotte]

Good morning.

Welcome to the Standing Committee on Finance. It is our 20th meeting of this session. We're continuing with consultations on pre-budget 2011 for next year's budget of 2012.

We're very pleased to be here in Prince Rupert, British Columbia. We want to thank all of our witnesses for joining us here this morning.

We have four organizations presenting this morning. First of all, we have the Clean Energy Association of British Columbia. The Mining Association of Canada is second. Third, we have First Call: B.C. Child and Youth Advocacy Coalition. The fourth organization is the Prince Rupert Port Authority.

Thank you all for being here.

You each have up to five minutes for an opening statement, and we'll then have questions from members.

We'll begin with Mr. Kariya, please.

[Paul Kariya, Executive Director, Clean Energy Association of British Columbia]

Thank you very much.

Let me say that I'm pleased to be invited to be here, but I have to make a comment about our setting. While I'm representing the Clean Energy Association, I'm very partial to coastal British Columbia, and what a magnificent place in which to be. Thank you for being here.

For members of the committee who are not familiar with the Clean Energy Association of B.C., our mandate is to develop a viable, independent power industry in British Columbia that serves the public interest by providing cost-effective electricity through the efficient and environmentally responsible development of the province's energy resources. We have about 300 members.

More than 1,100 workers are currently directly employed in 48 operating projects, and another 15 projects are under construction. The proven technologies include run-of-river hydro, small storage hydro, wind, biomass, biogas, and natural gas. Today these projects represent an estimated $5.4 billion in capital investments. They have a significant multiplier effect through our first nations partnerships and provide tax revenue to all levels of government at a community level and through our extensive supplier chains.

Currently, 125 Indian bands out of 203 in British Columbia have some involvement with our sector. We're very proud of the relationships we have with first nations.

This year your deliberations occur at a time when there is a unique combination of global economic uncertainty and unprecedented opportunity for British Columbia and Canada in significant new industrial activities in LNG, mining, and shale gas. I know my colleagues on the mining side have a lot of exciting news to share with you in terms of the outlook in B.C.

A key hotbed of this activity is happening in northern British Columbia, which is anchored by regional centres such as Prince Rupert, Terrace, Kitimat, Prince George, Fort St. John, and Fort Nelson. By naming those centres, I'm in no way forgetting the smaller centres that exist throughout northern B.C.

B.C. recently announced its provincial jobs plan, which serves as an excellent foundation to stimulate the investment required to realize the opportunities the province has in front of it.

Clean Energy B.C. believes the ambitious targets outlined for three LNG facilities by 2020 and eight new mines and nine upgrade expansions by 2015 are attainable and laudable goals. Clean Energy B.C. members strongly support the sustainable development of our natural resources to provide the jobs and government revenue that allow our province to enjoy one of the highest standards of living in the world.

As our industrial base grows with these new opportunities, CEB.C. also applauds the provincial government's commitment to ensure the province remains a climate change leader. Around the world and within the rapidly growing clean energy sector, British Columbia's leadership in addressing climate change has puts the province on the map for investors.

What can the Government of Canada do to help out?

The first recommendation would be that we need an energy vision. Canada has bits and pieces of programs and strategies. We need to tie this together with what the provinces are doing through a strategy that underpins it all. Conservation initiatives, coal, oil and gas, renewables such as my sector, clean technologies, transmission lines, transmission developments, smart grids and distributed generation, a climate change agenda, industrial growth, and economic development all need to come under a new energy vision for Canada.

The second recommendation is more specific. British Columbia needs help to build the necessary transmission infrastructure in northern B.C. Federal participation in the northwest transmission line, which is very close to here, is welcome and a good model for what else is needed and how it can be done, but we also need a northeast transmission line and upgrades that go from Prince George, westward to Terrace, and ultimately to Prince Rupert.

Thirdly, in terms of renewable energy, Canada needs to spur development in the renewable sector. Supportive policies and instruments such as potential tax incentives or a green bond would help increase investment, innovation, and new developments.

Furthermore, we need to see harmonization between federal and provincial environmental assessments and permit regulations. We create jobs at a high level that last by having our federal and provincial investment conditions coordinated with market opportunities. Human and natural resource capital is synchronized to maximize what we create.

More specifically within the energy sector, we have new opportunities for industrial load growth that are fundamentally different from those in the past. Specific to the energy requirement for this industrial load, recent B.C. Hydro estimates show a range of relatively short-term growth specific to the opportunities that is equivalent to over three Site C dams. This is the major dam project that B.C. Hydro is pursuing in the northeast, which is a significant development. But the load growth that's proposed for northern B.C. is three times what would be met by that one project.

Clean energy fuel solutions are cost-competitive with whatever B.C. Hydro can provide. Gas and clean energy are the two options that are before the province and the federal government. We're saying that both need to be engaged and involved. We certainly ask for a place for the clean energy sector to help with the economies anchored by centres like Prince Rupert, Terrace, and Kitimat.

With that, let me conclude. Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

I should correct that our second guest is the Mining Association of Canada, but we have the Mining Association of British Columbia here as well, so I apologize for that oversight.

It's my understanding that the Mining Association of British Columbia is giving the formal presentation, but both of you will be presenting. Is that correct?

[A voice]

That's correct. Thank you.

[The Chair, Conservative, James Rajotte]

Welcome, and please begin your presentation.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Okay.

We are very related. We are independent from each other, but I used to have her job until June, so I do understand this province a little bit as a result, if I haven't forgotten too much.

We're also similar in that we both represent the producing side of the mining business, so we have members who produce a whole range of commodities. In my case, because I represent the Mining Association of Canada, we represent everything from base metals, to gold, precious metals, diamonds, uranium, oil from the oil sands, copper. You name it, and you'll find it produced by our members.

I also wanted to echo the comment made about this great backdrop. This is one of the most important gateways to the emerging markets in Asia, and right here you can see the kind of underlying economic strength in Canada as a result of our natural resource sector. I wanted to emphasize that point today. We're all aware of the extreme volatility in today's global economy, and Canada's outperforming most of the world. One of the reasons we're doing so is obviously the actions taken by governments in the past to put us in stronger financial shape to begin with, but also because we have a natural resource strength that other countries do not have.

By way of example, in the mining sector just between 2009 and 2010, our contributions to government increased by 65%. Ours was one of the first sectors to rebound from the 2008 crisis so quickly. Within three months, our industry was back on track and we've been going strong ever since. Notwithstanding the volatility of the last few months, you will see commodity prices that are still at a pretty healthy range. Our industry and our companies are also today in a more solid position than they were in 2008, which caught a lot of companies off guard. We do have some underlying strengths now that position us well for the future.

I have this presentation, which I'm not going to go through slide by slide, given that it's five minutes. I'll just ask you to flip ahead to China as the mineral price driver. I think you're all familiar with this, but the underlying strength behind what's happening in the mining business is because of countries like China, India, Brazil, Mexico, and so on. They're the reason that commodity prices continue to remain strong, notwithstanding what's happening in Europe. Our industry is bullish about the future. We believe that we will remain a cyclical industry, but we are in a period now of long-term economic opportunity and growth that will probably be with us for several decades. For Canada, which has a mining sector that is homegrown, which is a global leader and a vast country with tremendous resources, we have a huge opportunity ahead of us.

What's behind some of this? There are some little facts here, but if you just look over the foreseeable future, Chinese growth is expected to be in the 6% to 9% range over the next number of years. And look at what's happening in China. Right now, only 10 people per 100 have a car in China, versus 76 in the United States; four have a personal computer, versus 76 in the United States. This is the kind of change that is happening now. As this just continues, the demand for the things that make these things that the Chinese want is going to continue to support commodity prices.

If you look at the Canadian opportunities, we have now estimated that there are some $137 billion in new private sector investment that could be spent in the next five years in the mining sector alone. A lot of this is actually already committed. Some of it has been announced. Vale, for example, has announced that there's some $10 billion going into Manitoba, Ontario, and Newfoundland. Teck here in British Columbia has announced major investments to its Trail facility and to expanding Highland Valley. So there's a lot that's already there, but there's a lot more that could come.

Why are we in this situation? Because of the steps that successive governments have made to make Canada one of the most attractive jurisdictions in the world for mining. We now capture the largest share of global mineral exploration because of tax measures like flow-through, because we have tremendous human resource capacity, and because we are a global leader. We know how to do this in this country.

We've been smart about our infrastructure. Here we have, for example, Ridley Terminals, the investments in the gateway, the new investments in the Highway 37 power line, which will open up a whole new region of British Columbia for economic development, and a huge copper resource.

So we've done a lot to plan things.

I'm nearing the end.

[The Chair, Conservative, James Rajotte]

You have five minutes for the two of you.

[Pierre Gratton]

Oh. We thought we each had five, and then we thought we didn't, and then we thought we did again.

[The Chair, Conservative, James Rajotte]

We can ask the will of the committee. Is it okay?

[Some hon. members]

Agreed.

[Pierre Gratton]

We've come a long way for this, you know.

[A voice]

This is the government and B.C. actually getting along.

[The Chair, Conservative, James Rajotte]

That's a five-minute introduction.

[Pierre Gratton]

Do I still have a minute?

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Pierre Gratton]

Okay. So what do we need to do going forward? I want to focus on the single most important thing you can do.

In order to enable this $137 billion to actually happen, or at least a good part of it, we need an efficient environmental review process. Resources were provided by the Canadian Environmental Assessment Agency last year. Amendments were done to make the process more efficient. That funding runs out at the end of this year. We would ask that the funding be renewed so that you can actually make sure this economic value can be brought forward for Canadians.

That is probably our single most important request on the part of the mining industry in Canada.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Mining Association of B.C., please.

[Karina Briño, President and Chief Executive Officer, Mining Association of British Columbia; Mining Association of Canada]

Thanks very much.

Thank you for the opportunity to speak to you today. Sorry for the confusion about what we were all going to be doing.

I will try to keep it brief. I think Pierre has provided a very good and succinct overview of what's going on in the mining sector in Canada.

In British Columbia, we are seeing unprecedented growth in the opportunity for a healthy and thriving mining industry in B.C. We are adopting measures that I think are going to allow us to provide more information to the public about current and modern mining practices through the adoption of sustainable mining. This is a management system that will allow us to report publicly on how we're doing business in the communities where we are operating.

What I would like to focus on, and what I think would be of interest to your committee, is the potential for mining in British Columbia. I would like to echo Pierre's comments about the extreme urgency to have an effective and timely permitting process. We have a regulatory system that dictates that both governments have a say on how projects are developed and implemented, not only in Canada but in particular here in B.C.

So for us, the primary focus will be on seeking opportunities for collaboration on finding efficiencies. Continued funding for the major projects and management offices is something we're advocating for as well.

We are leaving you with a deck for your reference later. I think—and Paul alluded to this—we do have a commitment or a strategy from the B.C. government to grow the industry over the next four years. The timelines are not only very ambitious but also very aggressive. We like to hear that message, but that does require very strong collaboration with the federal government, and we're here to say that's our intent—to ensure that we do have those partnerships and that we do have those opportunities to work with you.

One of the things that I think is going to provide that opportunity to come to fruition is the ability to not only have a very effective permitting process with the appropriate funding going into those agencies, but also to have human resources. The federal government has been a very strong contributor to the creation of programs and services that address the capacity issues we have on the labour side of the industry. We're here to let you know that is a very critical factor, going forward.

We do understand that sector council funding and some of the initiatives have been discontinued, but I think there is an opportunity to look for the creation of partnerships between industry and government to ensure that those services and programs continue to be available. I'm speaking specifically of the Mining Industry Human Resources Council and also the funding that has been allocated for aboriginal and youth training.

So permitting and training are things we're looking forward to working with you on, to ensure that not only the B.C. government's agenda is met in terms of the growth of the industry, but also the federal government’s.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from First Call: B.C. Child and Youth Advocacy Coalition, please.

[Louisa Sanchez, School Trustee, First Call: B.C. Child and Youth Advocacy Coalition]

Thank you very much for your interest in listening to our presentation. Seeing that it's five minutes, I must go on.

First Call: B.C. Child and Youth Advocacy Coalition is a coalition of provincial and regional organizations, individuals, and local community networks who share the belief that children and youth should have first call on our nation’s resources.

Our 90 partner organizations are committed to achieving the following four keys to success for all children and youth: a strong commitment to early childhood development; support in transitions from childhood to youth and adulthood; increased economic equality; and safe and caring communities.

Our coalition is really pleased to respond to the finance committee’s invitation for advice on how to achieve sustained economic recovery, as investments in children’s healthy growth and development form the foundation of any society’s social and economic sustainability. Similarly, we are pleased to share our recommendations with the committee for budget measures that will help ensure shared prosperity and a high standard of living for all.

This submission makes three recommendations for the committee’s consideration with regard to the preparation for the 2012 federal budget.

Number one would be to place a high priority on increasing Canada’s annual investments in early childhood care and learning, from our current 0.25% of GDP to the recommended UNICEF benchmark of 1% of GDP.

Number two would be to focus spending and redesign federal tax policy with the aim of reversing the growth of income inequality in Canada.

Number three would be to submit all budget decisions to the scrutiny of a child impact assessment, especially for impacts on members of particularly vulnerable groups, such as aboriginal children, children with disabilities, recent immigrant children, and children in lone-parent and female-led families, in order to ensure we do no harm.

Accomplishing the first two broad objectives, supporting early childhood development and reducing income inequality, is fundamental to creating a healthier, more sustainable path of social and economic development for our country. The third recommendation provides a process with little or no cost, which will reduce the risk for negative unintended consequences.

Canada’s public expenditure on early childhood services is extremely low in comparison to other OECD countries. Yet we know from extensive research on human development that the early years represent the unique window in the human life course during which citizens’ physical, socio-emotional, and cognitive potential are especially malleable to the positive effects of nurturing environments and strategic human capital investments.

Canada’s failure to properly support young children and their families through more effective social policy, such as more generous and inclusive parental leave, adequate income supports for those in need, and universal access to quality early care and learning for all children is resulting in high rates of vulnerability in children. This vulnerability translates into weakened educational outcomes, health inequities, and long-term loss of productive potential. This is a recipe for unsustainability and rising social costs.

If we are truly interested in increasing productivity and ensuring the next generation is equipped to compete in an international, knowledge-based economy, the starting place is increasing Canada’s public investments in early childhood development and education.

You've asked us to give our best thoughts on what's important, our recommended priorities for next year, and what the government can do to help us. In answering, we start from the assumption that we all want what is best for B.C.'s children, while recognizing that there will be disagreements—sometimes within the coalition and sometimes with the government of the day—about which public policies include budget priorities that will be serve our children.

We are looking for the 2012 federal budget to demonstrate the wisdom of long-term thinking, which judges every tax and program spending measure from the view of its impact on the well-being of Canada's youngest and most vulnerable, children and families, and places child and youth rights at the top of the priority list.

That's my five minutes?

[The Chair, Conservative, James Rajotte]

Yes. Thank you for your presentation.

We'll now hear from the Prince Rupert Port Authority, please.

[Don Krusel, Chief Executive Officer, Prince Rupert Port Authority]

Good morning, ladies and gentlemen, and thank you for this opportunity to address the Government of Canada's Standing Committee on Finance.

First, I would like to welcome all of you to Prince Rupert and the Port of Prince Rupert, which is becoming a household name throughout the international transportation community as a shining star and an example of how ports can create economic wealth and prosperity.

I think it's very significant that this committee has come here today to witness first-hand the type of economic growth that can be created through the strategic investment of public funds in ports and infrastructure. During the next five minutes I will propose that continued investment by the Government of Canada in the Port of Prince Rupert and the Asia-Pacific gateway and corridor initiative will continue to unleash the full economic potential of Canada's trade with Asian economies.

The year 2007 was a watershed year in the port's history, with the conversion of the Fairview facility into a highly efficient container terminal. I need to emphasize at this point that this capital project was to become the first investment by the federal and provincial governments into what is now referred to as Canada's Pacific gateway. It has made a profound and extraordinary impact on this community and the rest of western Canada, as it ushered in an amazing period of growth that has continued relentlessly despite the global recession.

In the 45 months of operation since it opened in October 2007, we have experienced an unprecedented 40 months of year-over-year growth in container volume. Last year, the Port of Prince Rupert was recognized as the fastest-growing container terminal in North America and the eighth-fastest in the world.

In 2004, and once again with the financial support of federal and provincial governments, we built and opened a new cruise ship terminal on the downtown waterfront. It was an immediate success and during its peak year attracted over 110,000 cruise passengers to this community. The direct impact on the city's tourism retail business exceeds $4.5 million annually, and when passengers come onshore this city's population increases by nearly 20%. You can imagine the economic impact that has.

Today the Port of Prince Rupert serves as the North American gateway of the northwest transportation corridor. This corridor extends to central Canada and also on to Chicago and beyond to Memphis and New Orleans. It connects the populations and industry of central North America to the rapidly growing Asian economies.

The port has a unique strategic advantage of being the closest North American port to Asia by up to three days' sailing time. In brief, we are located on the shortest land-sea trade link between two of the world's most dynamic economies.

In terms of bulk cargoes, Ridley Terminals Inc., or RTI, which is a federal crown corporation, operates the advanced coal facility on Ridley Island. It has begun a major expansion to its existing facilities that will increase its capacity from the current 12 million tonnes per year to a projected 24 million tonnes per year. A potential second phase of expansion could increase RTI's annual capacity to over 40 million tonnes of capacity, making it the largest bulk handling terminal on the west coast of North America.

This initiative alone has created dozens of local construction jobs. And more importantly, it supports the growth of the mining concerns throughout western Canada. Although we here in Prince Rupert are focused on the 20 to 25 new permanent jobs that will be created at the terminal by this expansion, that is a shadow of the several hundreds of mining jobs and the hundreds of millions of dollars of mining development investment that will be made possible by this additional capacity on Canada's gateway to Asia.

Prince Rupert is an essential component of the federal government's Asia-Pacific gateway and corridor initiative, but currently all terminals on the North American west coast are near capacity and require expansion to facilitate the continued growth of Canada's resource-based economy.

In Canada, in the resource sector, a substantial private investment is planned over the coming years. However, none of these export trade opportunities can be realized for Canada without a gateway, a doorway to international markets. We here at the Port of Prince Rupert are that doorway for Canadian trade.

Without the continued expansion of port infrastructure, Canada's resources and products will be shut out of international markets. It would be like building a grand mansion with many rooms, but with no front door to gain access to its rooms.

But we here at the Port of Prince Rupert have a plan that will ensure that Canada's trade door remains open, and open wide, on the west coast. We have a vision that we refer to as the 20-20 development plan, and once fully realized the Port of Prince Rupert will have the added capacity of over 100 million tonnes to service Canada's expanding trade objectives with Asian markets. Nowhere on the west coast of North America is there greater availability and opportunity for such expansion.

The potential is enormous. The economic spinoffs described earlier with the container terminal pale in comparison to the promise of the 20-20 development plan. As I am sure you are all aware, Canada is primed to take advantage of the increasing trade opportunities with Asia. Seizing these opportunities means wealth and employment for all Canadians, but it also requires strategic investments in Canada's doorway to the world markets: the Port of Prince Rupert.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll begin members' questions with you, Mr. Mai. We'll have a five-minute round, please.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you very much.

Thank you very much to all the witnesses for being here today. I'm sure I can say on behalf of my colleagues that it is a pleasure for us to be here. It's beautiful, from what we've seen so far.

I have a quick question for the Clean Energy Association of British Columbia. In the opposition we've been pushing for more action from the government regarding greenhouse gas emissions. We've been saying that we should put a price on pollution and also we've been pushing the cap and trade. Can you say whether you believe that from a federal perspective we should push more for the cap and trade system?

[Paul Kariya]

Thank you very much for your question, Mr. Mai.

I think first and foremost Canada needs an energy vision, a strategy that pulls together various elements of what our economy is about. Cap and trade is one tool. So is a carbon tax. These are all necessary, but I think without that strategy first, these are disjointed. Similarly with conservation efforts. We need to fuel our economy, there's no doubt about it, and there's a role for different fuels, including gas and including oil and coal and what not. But we need a strategy that oversees all this. Without that, I think tools in isolation can get lost.

So I'm very supportive of cap and trade, we're very supportive of the carbon tax, and in that I need to give credit to British Columbia and the vision it has had as a province. But I think first and foremost we need a strategy.